Under Decision No. 437/ TTg issued last Saturday, the Government has approved plans to borrow 384 trillion dongs (US$16.91 billion) this year, of which 275.97 trillion dong will come from domestic loans and the rest will be foreign loans.

The loans will be used for balancing the State budget (341.77 trillion dong), offsetting budget overspending (195 billion dong), repaying principal (146.77 trillion dong ) and re-lending to enterprises (42.23 trillion dong).

The government also plans to pay 256.769 trillion dong worth of debts in 2018.

Under the decision, the prime minister also approved plans on borrowing limits guaranteed by the government. The limits for domestic bond issuance of Vietnam Development Bank and Vietnam Bank for Social Policies are 24.43 trillion dong and 9.67 trillion dong, respectively.

The limit for domestic and foreign borrowing for firms’ projects guaranteed by the government are set at 2 trillion dong and $700 million dong maximum, respectively.

Under the decision, the prime minister has directed the Ministry of Finance to implement the plans.

The prime minister last Friday also signed another decision to ease regulations on guarantee for new domestic and foreign loans taken by enterprises.

Under Decision No. 433/QD-TTg, the government will only limit its guarantee for new domestic and foreign loans of enterprises to implement their investment projects, instead of stopping all guarantees for new loans as was done earlier.

The new regulation is aimed at amending and supplementing Decision No. 544/QD-TTg, dated April 20, 2017, on approving a medium-term debt management programme during the 2016-18 period. Under Decision No. 544/QD-TTg, the Government decided to temporarily stop all guarantees for new loans of enterprises.

The prime minister also asked the Ministry of Finance to review the list of projects guaranteed by the Government in the first half of 2018 and submit it to him for consideration and approval.

The medium-term debt management programme during the 2016-18 period is aimed to mobilise loans at appropriate costs and risks to meet the need of balancing the State budget and socio-economic development during certain periods.

Besides this, the allocation and use of loan capital must be for the right purposes, ensuring debt repayment capability, maintaining the public debt index, Government debt and national foreign debt at a safe level as well as ensuring national financial security in line with Vietnam’s context and international practice.

Under the programme, public debt (including government debt, government guaranteed debt and local government debt) should not exceed 65 per cent of gross domestic product (GDP).