VietNamNet Bridge - The loan guarantees issued by the government have mostly gone to projects in power, aviation, cement production, transport infrastructure and two banks.

The Song Thao Cement Plant

An updated report by the Ministry of Finance (MOF) shows that by December 31, 2015, the government had committed to act as the guarantor for loans worth $26 billion, which includes $21.8 billion worth of foreign loans.

The real total debts the government had guaranteed by the end of 2015 was $21 billion, which included debts borrowed to restructure SBIC, the shipbuilder. The guaranteed amount accounted for 17.6 percent of the total public debt and 11.1 percent of GDP.

The loan guarantees issued by the government have mostly gone to projects in power, aviation, cement production, transport infrastructure and two banks.

The granting of government’s guarantee in 2015 was the focus on investment programs under implementation, including the fleet development program initiated by Vietnam Airlines, the nation’s flag air carrier, projects within the framework of the seventh power generation development program and the Ho Chi Minh Road project as decided by the National Assembly.

In some cases, MOF and enterprises took initiative in negotiating with foreign lenders to pay debts before maturity, helping reduce debts guaranteed by the government by $131.5 million.

As for projects which met financial difficulties, MOF suggested solutions for settlement for government approval.

Affirming that the government’s guarantee was granted only to projects in the most important fields of the national economy, MOF said that four electricity generation projects received the guarantee in 2015 with the total value of $2.1 billion. The projects have made important contribution to the investment of the Vinh Tan and Duyen Hai power plant complexes.

With the projects, the total guaranteed capital provided to the Electricity of Vietnam (EVN), the largest electricity project developer and the only electricity retailer, has increased by $2 billion. 

Meanwhile, the ratio of the guaranteed capital provided to EVN on the total guaranteed capital has increased from 56.14 percent by 2014 to 61.02 percent by 2015.

The investors of two hydropower projects – Song Con and Nam Na 3 – successfully negotiated with the creditors on the debt payment before maturity, thus allowing to finalize loans worth $90.4 million guaranteed by the government

The government also granted a guarantee for loans to Vietnam Airlines in its plan to expand the fleet and to cement manufacturers.

Cement production is a sector with many unprofitable projects, needing restructuring of loans. The projects include Song Thao, Thai Nguyen and Ha Long. 

The figures about guarantees granted to large state-owned conglomerates have raised concerns about the public debt.

MOF on July 4 announced that the 2014 public debt had reached $86 billion, including VND810 billion worth of foreign debt.


TBKTVN