Promote decentralization and delegation of authority along with risk control tools

Regarding the issuance of local government bonds in the domestic capital market, the draft Law fully delegates the authority to the provincial People's Council to decide. The National Assembly Deputies of Group 9 (including the National Assembly Delegation: Hung Yen, Hai Phong) said that there should be a regulation that the provincial People's Committee must send a report to the Ministry of Finance to update the national public database and soon build a unified national public database connecting from the Ministry of Finance to each locality for management.

Commercial banks must bear at least 20-30% credit risk when re-lending.

Discussing in groups, National Assembly deputies agreed on the necessity of amending and supplementing a number of articles of the Law on Public Debt Management, especially in the context of our country setting a target of double-digit economic growth in the coming years while still ensuring control of public debt and macroeconomic control.

Regarding the addition of special procedures and processes in ODA and preferential loans, the draft Law currently allows the application of 6 special procedures to shorten the negotiation and signing process. However, National Assembly member Nguyen Thi Viet Nga ( Hai Phong ) observed that this process has not yet established risk control principles and has not yet stipulated a monitoring and reporting mechanism for cases where procedures are "loosened".

National Assembly Delegate Nguyen Thi Viet Nga (Hai Phong) speaks. Photo: Khanh Duy

Therefore, the delegate proposed to add the principle that “special procedures are only applied when there is an urgent need or according to the decision of the competent authority and the decisions must be reported to the National Assembly Standing Committee” in Clause 7, Article 29 of the draft Law. If the loans significantly increase public debt obligations, this principle will establish a limit and not reduce the requirement to assess risks, debt repayment capacity and investment efficiency.

Regarding the expansion of the subjects eligible for re-lending and the risk of converting public debt obligations (Articles 35 and 36), the draft Law has expanded and allowed public service units to self-insure regular expenditures and part of investment expenditures to access ODA loans and preferential loans; at the same time, it has added a mechanism for commercial banks to re-lend but not bear credit risks.

“This may lead to a situation where the benefits belong to the borrower but the risks belong to the state budget. Therefore, it should be regulated that commercial banks must bear at least 20% to 30% of the credit risk when re-lending to ensure appraisal and direct supervision,” the delegate suggested.

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

The delegate also proposed to remove the regulation on not bearing credit risks in Clause 2, Article 35. Instead, it stipulates that commercial banks are responsible for joint control and bear part of the risks; and add a regulation on not granting state budget licenses to public service units that do not meet the conditions for re-lending to avoid legalizing risks.

Avoid abuse during implementation

Also interested in Article 35, National Assembly Deputy Nguyen Van Huy (Hung Yen) pointed out that the draft Law supplements the regulation that the Ministry of Finance authorizes policy banks or commercial banks to re-lend to enterprises to invest in programs and projects in the State's priority investment list in the form of the re-lending agency bearing a part of the credit risk and the Government will provide detailed instructions on this content. However, the delegate suggested that it is necessary to clarify what "bearing a part of the credit risk" means and what the ratio is to avoid abuse during the implementation process.

At point e, clause 15 amending a number of points of Article 36 of the current Law, the draft Law stipulates that "in case a public service unit does not meet the conditions for re-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 to apply the financial mechanism allocated from the state budget for the program or project, as a basis for implementing the procedure for establishing the project's investment policy".

National Assembly Deputy Nguyen Van Huy (Hung Yen) speaks. Photo: Khanh Duy

Delegate Nguyen Van Huy suggested carefully considering the above content because if a public service unit does not meet the re-borrowing conditions, it is not eligible for re-borrowing, so it is not necessary to transfer to a financial agency for allocation 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 prepare a bond issuance project and report to the Provincial People's Council for approval. Thus, the authority is completely assigned to the Provincial People's Council to decide on this issue.

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

Delegates said that this is a step to promote decentralization and delegation of power, but at the same time, it also needs to be accompanied by risk control tools to avoid the situation where localities issue bonds exceeding the debt ceiling, then depend on the central budget to handle. Therefore, there should be a regulation that the Provincial People's Committee must send a report to the Ministry of Finance to update the national public database and soon build a unified national public database connecting from the Ministry of Finance to each locality for management.

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