Promoting decentralization and delegation of authority, coupled with risk control tools.

Regarding the issuance of local government bonds in the domestic capital market, the draft Law grants full authority to the Provincial People's Councils to decide. Members of National Assembly Delegation Group 9 (comprising the delegations from Hung Yen and Hai Phong) suggested that there should be a regulation requiring provincial People's Committees to submit reports to the Ministry of Finance for updating into the national public data database, and that a unified national public data database connecting the Ministry of Finance to each locality should be established soon for management purposes.

Commercial banks must bear at least 20-30% of the credit risk when relending.

During group discussions, National Assembly deputies agreed on the necessity of amending and supplementing several articles of the Law on Public Debt Management, especially in the context of Vietnam's goal of achieving double-digit economic growth in the coming years while still ensuring control over public debt and macroeconomic stability.

Regarding the addition of specific procedures in ODA loans and preferential loans, the draft Law currently allows the application of six specific procedures to streamline the negotiation and signing process. However, National Assembly Deputy Nguyen Thi Viet Nga ( Hai Phong ) noted that this process has not yet established principles for risk control and has not stipulated a reporting and monitoring mechanism for cases where procedures are "loosened".

National Assembly Deputy Nguyen Thi Viet Nga (Hai Phong) delivers a speech. Photo: Khanh Duy

Therefore, the delegates proposed adding the principle that "special procedures shall only be applied when there is an urgent need or at the decision of a competent authority, and these decisions must be reported to the Standing Committee of the National Assembly " to Clause 7, Article 29 of the draft Law. If the loans significantly increase public debt obligations, this principle will establish a limit and will not reduce the requirements for assessing risk, repayment capacity, or investment efficiency.

Regarding the expansion of eligible borrowers and the risk of transforming public debt obligations (Articles 35 and 36), the draft Law has expanded and allowed public service units that are self-sufficient in covering recurrent expenditures and a portion of investment expenditures to access ODA loans and preferential loans; at the same time, it adds a mechanism for commercial banks to provide on-lending without bearing credit risk.

"This could lead to a situation where the benefits accrue to the borrowing entity while the risks fall on the state budget. Therefore, regulations should stipulate that commercial banks must bear at least 20% to 30% of the credit risk when relending to ensure proper assessment and direct supervision," the representative suggested.

Overview of the discussion at Group 9. Photo: Khanh Duy

The delegates also proposed removing the provision exempting commercial banks from credit risk in Clause 2, Article 35. Instead, they suggested that commercial banks be responsible for joint control and bearing a portion of the risk; and adding a provision prohibiting the granting of state budget funds to public service units that do not meet the conditions for on-lending, in order to avoid legitimizing risks.

Avoid abuse during implementation.

Also concerned about Article 35, National Assembly Deputy Nguyen Van Huy (Hung Yen) pointed out that the draft Law adds a provision allowing the Ministry of Finance to authorize policy banks or commercial banks to relend to enterprises for investment in programs and projects on the State's priority investment list, with the relending agency bearing a portion of the credit risk, and the Government providing detailed guidance on this matter. However, the deputy suggested clarifying what "bearing a portion of the credit risk" means and what percentage it represents to avoid abuse during implementation.

Point e, Clause 15 amends several points of Article 36 of the current Law. The draft Law stipulates that "in cases where a public non-business unit does not meet the conditions for borrowing as prescribed in point a, Clause 2 of this Article, the agency prescribed in Clause 1, Article 29 of this Law shall report to the Government for consideration and decision on applying the financial mechanism of allocation from the state budget for the program or project, as a basis for carrying out the procedures for preparing the investment policy of the project."

National Assembly Deputy Nguyen Van Huy (Hung Yen) delivers a speech. Photo: Khanh Duy

Representative Nguyen Van Huy suggested that the above content be carefully considered because if a public service unit does not meet the conditions for relending, it is not eligible for relending and therefore does not need to be transferred to a financial agency for disbursement from the state budget.

Regarding the issuance of local government bonds in the domestic capital market, the draft Law removes the requirement to seek the opinion of the Ministry of Finance before issuing bonds and assigns the provincial People's Committee to develop a bond issuance plan and report it to the provincial People's Council for approval. Thus, the authority to decide on this matter is entirely delegated to the provincial People's Council.

National Assembly deputies from Hung Yen province participate in the discussion session of Group 9. Photo: Khanh Duy

Delegates argued that this is a step towards decentralization and delegation of power, but it must also be accompanied by risk control tools to prevent localities from issuing bonds exceeding the debt ceiling and then depending on the central budget for resolution. Therefore, there should be regulations requiring provincial People's Committees to send reports to the Ministry of Finance to update the national public debt database, and a unified national public debt database connecting the Ministry of Finance to each locality should be built soon for management purposes.

Source: https://daibieunhandan.vn/day-manh-phan-cap-phan-quyen-di-kem-voi-cong-cu-kiem-soat-rui-ro-10394135.html