Hanoi authorities are seeking public feedback on a draft resolution by the municipal People's Council regulating the issuance of local government bonds, project bonds, infrastructure bonds, urban bonds and loans from credit institutions and state financial funds to mobilize additional resources for development investment. The proposal is intended to implement provisions under the Capital Law.

Under the draft, in addition to traditional local government bonds, the city would introduce several new fundraising instruments, including project bonds, infrastructure bonds, urban bonds and green local government bonds.

Project bonds would be issued to raise capital for one or more specific public investment projects that fall within the spending responsibilities of the local budget.

Infrastructure bonds would be used to finance major infrastructure works and key construction projects across the city.

Urban bonds would be issued to mobilize resources for urban infrastructure development and Hanoi's broader urban development programs.

Meanwhile, green local government bonds would be dedicated to financing environmental protection activities and projects that generate environmental benefits.

All of these instruments would remain local government bonds in nature. The different classifications are intended to clearly define how the capital raised will be allocated to specific categories of projects.

The draft also stipulates that the Hanoi People's Committee may borrow funds to cover budget deficits and refinance the principal of existing municipal debt in accordance with legal regulations. However, capital mobilization would be subject to strict conditions. Total borrowing levels, outstanding debt and debt-servicing obligations must remain within limits prescribed by the National Assembly, the Government and relevant laws.

Any borrowing or bond issuance must be incorporated into the city's medium-term and annual public debt management and repayment plans.

Notably, projects financed through borrowed capital must be included in approved medium-term public investment plans and must complete all investment procedures in accordance with the law.

Debt repayment obligations under review

The draft also requires all bond issuance and borrowing activities to ensure transparency, efficiency and consistency with the city's fiscal capacity and debt repayment ability.

During consultations on the proposal, the Standing Committee of the Hanoi People's Council requested the drafting agency to further quantify capital mobilization needs for each development phase, assess the capital absorption capacity of projects and programs expected to utilize borrowed funds, and forecast the city's debt repayment obligations over the medium and long term.

According to the council's Standing Committee, capital mobilization must remain within statutory debt ceilings, align with budget-balancing capacity and avoid creating risks to the city's financial stability.

Responding to these recommendations, the Department of Finance said borrowing needs would be determined based on public investment plans, as well as medium-term and annual borrowing and repayment plans approved by the People's Council. Capital mobilization for projects would also be guided by approved public investment priorities and the city's budgetary capacity.

Thanh Hue