Vietnam to adjust on-lending rate of ODA loans

The government has issued Decree No. 79/2021/ND-CP amending and supplementing a number of articles in Decree No. 97/2018/ND-CP on the on-lending of ODA loans and foreign concessional loans of the government, to take effect from October 1, 2021.

Decree 79 amends Clause 1, Article 21 on the on-lending rate to the People’s Committees of centrally-governed cities and provinces. Specifically, for localities whose proportion of balanced addition from the central budget to the total balance of the local budget ranges from 50 per cent to less than 70 per cent, the on-lending rate is 30 per cent of ODA loans (down 10 per cent compared to the former regulation). Hanoi and Ho Chi Minh City will have an on-lending rate of 100 per cent of ODA loans.

In addition, the government will decide on an on-lending rate that is not lower than 10 per cent for a number of programs and projects related to sustainable development and adaptation to climate change in some localities in the Mekong Delta that the government needs to support under Government Resolution No. 41/NQ-CP.

During the implementation of on-lending, where the value of the loan collateral decreases to lower than the specified level above, the sub-borrower is responsible for supplementing collateral to ensure the minimum level of loan security.

The Decree also amends and supplements Clause 3, Article 16 on loan security. Specifically, the value of the loan collateral is to be at least equal to 120 per cent of the outstanding loan balance in the case of on-lending to enterprises and equal to 100 per cent of the outstanding balance of the on-loan in the case of on-lending to public entities.