SBV Tightens Control on Corporate Foreign Debts

The State Bank of Vietnam (SBV) has issued a draft decree on management of corporate foreign debts without the government guarantee.

 

Accordingly, State-owned enterprises - important economic entities in the economy and holders of huge State capital - need to have prudent and close management policies relating to foreign loans, said the central bank.

 

The draft decree says foreign borrowing plans of State-owned enterprises must be approved by State-equity representatives and the Ministry of Finance.

 

In addition, strict regulations on conditions of foreign loans of State-owned enterprises will help sort out effective borrowing projects.

 

Based on criteria of national debt security, the Ministry of Finance will establish limits of national foreign debts on annual basis. In case the criteria have not been approved by the Prime Minister, foreign loans cannot exceed 50 percent of borrowing limits in the preceding year.

 

Besides, the State Bank of Vietnam said it is necessary to ban individuals from borrowing foreign loans given the current context, adding that it might consider this when adjusting and amending the Ordinance on Foreign Exchange.