Chapter VII
MANAGEMENT OF PROVINCIAL DEBTS
Article 49. Purposes of provincial loans
1. Financing local budget deficit as prescribed in the Law on State Budget.
2. Repaying principal of local budget loans as prescribed in the Law on State Budget.
Article 50. Rules for provincial loans
1. A loan granted for financing local budget deficit is only used for development investment to carry out programs and projects in the mid-term public investment plan ratified by People’s Council of province.
2. The outstanding debt of a province must maintain a limit as prescribed in laws and regulations on state budget.
3. The People’s Committee of province may not apply for any external loan.
Article 51. Forms of provincial loans
1. Issuing provincial bonds in domestic capital market.
2. Receiving ODA on-lent loans or external concessional loans.
3. Applying for loans from other domestic financial sources as prescribed in laws and regulations state budget.
Article 52. Conditions for provincial loans
1. A People Committee of province which applies for a domestic loan for a project of socio-economic development eligible for funding from local budget as prescribed in the Law on State Budget must fulfill the following conditions:
a) The project has completed investment procedures as per the law and has been included in a list of mid-term public investment of province with approval of the competent authority;
b) It has a loan repayment plan according to every source of funds for investment as set forth in the Law on State Budget and the Law on Public Investment;
c) In case of raising a loan through bond issue, the scheme for issuing bonds must be made and assessed as prescribed in regulations of the Government on bond issues;
d) The amount of the loan or issued bonds is within the local budget's outstanding debt and deficit in accordance with laws and regulations on state budget.
2. A People’s Committee of province applying for ODA on-lent loan or external concessional loan must fulfill the conditions prescribed in Clause 1 Article 36 of this Law.
Article 53. Applying for and repaying provincial loans
1. A People’s Committee of province shall apply for a loan through forms prescribed in Article 51 of this Law and the following regulations:
a) In case of issuing provincial bonds in the domestic capital market, the People’s Committee of province shall make a scheme for bond issue, send it to the People’s Council of province for ratification, and then forward it to the Ministry of Finance for approval in terms of terms and conditions of bonds before the issue;
b) In case of an ODA on-lent loans or external concessional loan, the People’s Committee of province shall comply with Chapter V of this Law;
c) In case of a state fund loan, the People’s Committee of province shall submit an application for state fund loan enclosed with relevant documentation to the Ministry of Finance for decision;
d) In case of a loan from other domestic financial sources, the People’s Committee of province shall negotiate and conclude a loan agreement.
2. The People’s Committee of province shall set aside an amount in local budget or from other legitimate sources of funds as per the law to repay debt in full and on schedule.
3. The Government shall provide guidelines for provincial debt management.
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