GOVERNMENT GUARANTEE MUST NOT EXCEED 1.5%/YEAR
Based on the appraisal of financial plans of programs or projects and enterprises" financial situation, the Ministry of Finance shall set specific charge rates for each program or project depending on its risk level, which, however, must not exceed 1.5%/year of the balance of the guaranteed debt. This is one of the content on provision and management of government guarantee in the Decree No. 15/2011/ND-CP of the Government.
Government guarantee is the guarantee of the highest legality in Vietnam. A government guarantee commitment shall be made in the form of a letter of guarantee, a guarantee contract or a guarantee decision (below collectively referred to as letter of guarantee); the Government provides only guarantee, not re-guarantee.
The guarantee level must not exceed 80% of the total investment of a program or project, which includes all expenses related to the loan.
After receiving a complete and valid guarantee application dossier from the borrower or the bond issuer under regulation, the Ministry of Finance shall appraise the financial plan and guarantee application dossier in terms of objects and type of the program or project, the financial plan of the program or project using the loan or bond capital; for a key project or work or an urgent major project of special significance to national socio-economic development for which the investment policy has been decided by the National Assembly or the Prime Minister; or a commercial loan accompanied with a nonrefundable aid or an ODA loan to constitute a funding source as syndicate credit (project already designated according to accompanying funding source), the Ministry of Finance shall propose the Prime Minister to provide guarantee based on the financial plan of the approved program or project.