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THE PRIME MINISTER OF
GOVERNMENT
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SOCIALIST REPUBLIC OF VIET
NAM
Independence - Freedom - Happiness
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No: 272/2006/QD-TTg
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Hanoi, November 28, 2006
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DECISION
PROMULGATING THE REGULATION ON PROVISION AND MANAGEMENT OF
GOVERNMENT GUARANTEES FOR FOREIGN LOANS
THE PRIME MINISTER
Pursuant to the December 25, 2001 Law on
Organization of the Government;
Pursuant to the Government's Decree No. 77/2003/ND-CP of July 1, 2003, defining
the functions, tasks, powers and organizational structure of the Finance
Ministry;
Pursuant to the Government's Decree No. 134/2005/ND-CP of November 1, 2005,
promulgating the Regulation on management of foreign borrowing and foreign debt
payment;
At the proposal of the Finance Minister,
DECIDES:
Article 1.- To
promulgate together with this Decision the Regulation on provision and
management of Government guarantees for foreign loans.
Article 2.- This
Decision takes effect 15 days after its publication in "CONG BAO." It
replaces the Prime Minister's Decision No. 233/1999/QD-TTg of December 20,
1999, promulgating the Regulation on Government guarantees for foreign loans of
enterprises and credit institutions.
Article 3.- The Finance
Minister, the Governor of the State Bank of Vietnam and the Planning and
Investment Minister shall implement and guide and inspect the implementation of
the Regulation on provision and management of Government guarantees for foreign
loans promulgated together with this Decision.
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PRIME MINISTER
Nguyen Tan Dung
REGULATION
ON PROVISION AND MANAGEMENT OF GOVERNMENT GUARANTEES FOR
FOREIGN LOANS
(Promulgated together with the Prime Minister's Decision No.
272/2006/QD-TTg of November 28, 2006)
Chapter I
GENERAL PROVISIONS
Article 1.- Scope of
regulation
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Article 2.- Interpretation
of terms
The terms below are construed as follows:
1. Government guarantee for a foreign loan
(hereinafter referred to as Government guarantee) means a written commitment
made by the Government of the Socialist Republic of Vietnam (the guarantor)
through the Finance Ministry toward a foreign lender (the guarantee) to secure
the performance of payment obligations already committed in a loan agreement.
If the borrower fails to perform or fails to perform fully and in time payment
obligations already committed in the loan agreement, the guarantor shall
perform those payment obligations on the guaranteed's behalf under a letter of
guarantee. The borrower is obliged to refund the guarantor the money amount
paid by the latter on the former's behalf plus the interest and all expenses actually
arising in relation to that amount.
2. Government guarantee-providing agency means
the Finance Ministry (hereinafter referred to as the guarantee-providing
agency).
3. Guaranteed means an enterprise that borrows
foreign loans (the borrower) guaranteed by the Government. The guaranteed also
implies the borrower's lawful assignee(s) or transferee(s) accepted by the
guarantor.
4. Guarantee means a party that has the
ownership right over part or whole of a guaranteed loan. The guarantee is the
lender and its lawful assignee(s) or transferee(s) that are referred to as the
lender in loan agreements.
5. Assignee of the guaranteed or the guarantee
means a party that takes up the whole or part of the rights and obligations of
the guaranteed or the guarantee in the assignment.
6. Transferee of the guaranteed or the guarantee
means a party that takes up the whole or part of the rights and obligations of
the guaranteed or the guarantee in the transfer.
7. Payment obligation means payable amounts,
including loan principal and interest under a contract, interest on delayed
payment, charges and expenses, damages (if any) according to the terms of a
specific loan agreement and accepted in the letter of guarantee.
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9. Legal opinion means a document issued by the
Finance Ministry in compliance with regulations of Vietnam and international
financial and credit practice on legal grounds of commercial, investment,
financial and banking transactions conducted under Vietnamese law,
international treaties or agreements, contracts involving foreign parties and
other legal documents.
Article 3.- Government
guarantees are those guarantees of the highest legality in Vietnam. A
Government guarantee commitment is established in the form of letter of guarantee
or guarantee contract (hereinafter collectively referred to as letter of
guarantee).
The Government provides only guarantees, not
re-guarantees.
Chapter II
RESPONSIBILITIES OF
AGENCIES FOR PROVIDING GOVERNMENT GUARANTEES
Article 4.-
Responsibilities of the guarantee-providing agency
The Finance Ministry, as the Government
guarantee-providing agency, has the following responsibilities:
1. To promulgate and guide procedures for
considering, providing and managing Government guarantees;
2. To examine financial plans and conditions for
provision of guarantees according to dossiers of application for guarantees for
specific programs or projects, and submit them to the Government for decision
on guarantee.
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4. To directly provide Government guarantees and
organize the management of Government-guaranteed foreign loans as for
Government foreign loans as provided for in Article 6, Clause 1, Item g of the
Government's Decree No. 134/2005/ND-CP of November 1, 2005, promulgating the
Regulation on management of foreign borrowing and foreign debt payment;
5. To sum up credit institutions' loans which
require Government guarantees and are examined and proposed by the State Bank
of Vietnam (hereinafter referred to as the State Bank) to the Prime Minister
for decision;
6. To set limits of Government guarantees for
being integrated with limits of the Government's annual commercial loans;
7. To assess the performance of Government
guarantees and report on disbursement, payment of foreign debts and foreign
debt balance of Government-guaranteed loans according to the Regulation on collection,
reporting, summing up, sharing and publication of information on foreign debts;
8. To fulfil the obligations of the guarantor
toward guarantees (foreign lenders);
9. To apply financial tools and coercive
measures provided by law to claim debt amounts and expenses arising in relation
to the debt payment on the guaranteed's behalf;
10. To inspect the results of business operation
and use of foreign loans in order to supervise the guaranteed's debt payment
capability.
Article 5.-
Responsibilities of coordinating agencies
1. The State Bank has the following
responsibilities:
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b/ To certify the registration of
Government-guaranteed foreign loans;
c/ To coordinate with the guarantee-providing
agency in inspecting the use of loans and supervising the payment of foreign
debts of projects examined by the State Bank;
d/ To closely coordinate with the
guarantee-providing agency in creating conditions for the guarantee-providing
agency to discharge its responsibilities toward the guaranteed.
2. The Justice Ministry:
a/ To contribute opinions on legal matters in
loan agreements and Government guarantee agreements before they are submitted
to the Prime Minister for decision; to contribute opinions, when necessary, on
other legal matters concerning documents on borrowing of foreign loans and
payment of foreign debts of domestic enterprises and economic organizations at
the request of borrowers and the guarantee-providing agency;
b/ To examine matters in agreements on borrowing
of foreign loans and payment of foreign debts of the Government, which are
inconsistent with domestic law;
c/ To give legal opinions on loan agreements,
letters of guarantee, the guarantor and the guaranteed.
3. The Foreign Affairs Ministry shall coordinate
with the guarantee-providing agency in designating appropriate overseas
Vietnamese representations to be authorized to receive legal proceedings
dossiers related to Government guarantees and forward all those dossiers to the
guarantee-providing agency in cases legal procedures agreed upon in loan
agreements and letters of guarantees are court procedures.
4. Other concerned agencies shall coordinate
with the guarantee-providing agency in performing the state management of
foreign borrowing and foreign debt payment within the ambit of their functions
and powers and in accordance with this Regulation.
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OBJECTS, SCOPE AND
CONDITIONS FOR CONSIDERATION AND PROVISION OF GOVERNMENT GUARANTEES
Article 6.- Objects
entitled to guarantees
Objects to be considered for provision of
Government guarantees (the guaranteed) include domestic enterprises, economic
organizations and credit institutions of all economic sectors that directly
sign loan agreements with foreign lenders to borrow capital by mode of
self-borrowing and accountability for debt payment for execution of investment
or credit programs or projects and fully satisfy the conditions specified in
Article 8 of this Regulation.
Article 7.- Types of
programs or projects borrowing foreign loans which are considered for provision
of guarantees
1. Key investment programs or projects for which
investment policies have been approved by the National Assembly or the Prime
Minister.
2. Programs or projects which involve the import
of hi-tech equipment for production of export goods or provision of export
services, and those in domains prioritized for the State investment and capable
of paying debts.
3. Programs or projects funded with commercial
loans which, together with ODA source, constitute a funding source in form of
syndicated credit.
4. Programs or projects borrowing credit
institutions' loans examined and proposed by the State Bank for Government
guarantees.
Article 8.- Conditions
for provision of guarantees
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a/ Programs or projects borrowing capital must
have financial plans examined and determined by the guarantee-providing agency
as being efficient and capable of paying debts;
b/ Programs or projects borrowing capital from
credit institutions must have financial plans examined by the State Bank, which
requests the guarantee-providing agency to submit those programs or projects to
the Prime Minister for decision on provision of guarantees;
c/ They are approved by the Prime Minister for
guarantees.
2. Conditions on borrowers:
a/ Ensuring that at least 20% of the total
investment capital for each program or project is the own capital;
b/ Having complete dossiers of application for
Government guarantees according to the provisions of Article 9 of this
Regulation;
c/ Having conducted normal business activities
without a loss for the last three consecutive years and being currently free from
overdue domestic and foreign debts;
d/ Agreeing with the guarantee charge rate
specified in Article 14 of this Regulation;
e/ Submitting to sanctions imposed by the
guarantee-providing agency, including the freezing of accounts to coerce the
compensation for financial obligations performed by the guarantee-providing
agency on their behalf.
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a/ Its value lies within the total annual limit
of foreign commercial loans of enterprises or organizations of the public
sector and the forecast borrowing level of the private sector approved by the
Prime Minister;
b/ It is valued at least USD 10 million, except
for loans for programs or projects specified in Clause 3, Article 7 of this
Regulation;
c/ Its term is at least 10 years;
d/ Its currency is a freely convertible one;
e/ Its interest rate, charges and expenses are
suitable with the present conditions of the international market;
f/ Terms of the loan agreement are compliant
with Vietnamese law and international practice.
Article 9.- Dossiers of
application for guarantees
A dossier of application for guarantee to be
submitted to the guarantee-providing agency comprises:
1. The foreign lender’s official request for
Government guarantee and the borrower's official request;
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3. Investment decision accompanied with the
project dossier according to current regulations;
4. Financial plan proving the capability to
repay the loan, clearly identifying (i) the investment capital source
(including own capital and borrowed capital); (ii) feasibility of the loan in
terms of borrowing conditions; and (iii) the project's capability to repay the
loan;
5. The lender's offers, enclosed with the draft
loan agreement;
6. Financial statements for the latest three
years, which have been audited or certified by a competent agency. For
enterprises that have operated for less than three years, the financial
statements of their parent companies or of companies being their strategic
shareholders and the written commitments of their managing agencies or parent
companies or strategic shareholders to assure their debt payment capability are
required;
7. Written commitment to pay the guarantee
charge at the rate set by the guarantee-providing agency.
Article 10.- Guarantee
level
1. Guarantee level must not exceed 80% of the
total investment capital of a program or a project, including insurance premium
and loan interest during the construction process;
2. Guarantee level must lie within the annual
guarantee limit calculated by the Finance Ministry based on the annual limit of
foreign commercial loans of enterprises or organizations of the public sector
and the forecast of the annual foreign loans of the private sector approved by
the Prime Minister.
Chapter IV
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Article 11.- Order of
considering the provision of guarantees
The provision of Government guarantees is
considered in the following order:
1. Examination of the project's financial plan
and debt payment capability
Within 30 working days after receiving a
complete and valid dossier of application for guarantee from the borrower, the
guarantee-providing agency shall examine the financial plan according to the
set conditions and the dossier of guarantee application through the following
steps:
a/ Examination of objects and type of the
project, ensuring that the conditions specified in Articles 6 and 7 of this
Regulation are met;
b/ Examination of the project's financial plan
and debt payment capability. Methods of examination are specified in Appendix I
to this Regulation;
c/ Reporting, after examination, the examined
contents to the Prime Minister for decision.
Particularly, enterprises being credit
institutions with programs or projects borrowing foreign loans shall make
financial plans for examination by the State Bank. Within 30 working days, the
State Bank shall organize the examination of those financial plans and send its
official letters together with examination reports to the guarantee-providing
agency. Within 10 working days after receiving guarantee proposals of the State
Bank, the guarantee-providing agency shall submit those proposals to the Prime
Minister for consideration and decision on provision of Government guarantees
for loans.
2. Approval by the Prime Minister
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3. Negotiation on contents of the loan
agreement, the letter of guarantee and legal opinions
a/ After obtaining the Prime Minister's decision
on provision of Government guarantees, the guaranteed shall conduct
negotiations on the loan agreement, with the participation of the
guarantee-providing agency and the Justice Ministry. Within three working days
before conducting negotiations on the loan agreement, the guaranteed shall
supply the guarantee-providing agency and the Justice Ministry with the
following documents: the draft loan agreement; the signed commercial contract
(for EPC investment projects); the draft letter of guarantee and legal
opinions;
The guarantee-providing agency shall assume the
prime responsibility for the negotiation on contents of the letter of
guarantee, while the Justice Ministry shall assume the prime responsibility for
the negotiation on contents of legal opinions. After being agreed upon, the
contents of the letter of guarantee must be submitted by the
guarantee-providing agency to the Prime Minister for approval.
b/ Signing of the loan agreement: After
negotiations on contents of the loan agreement are completed, the guaranteed
shall submit these contents to the competent authority for approval and proceed
with the signing of the loan agreement;
c/ Completion of the guarantee provision
dossier: After the loan agreement is signed, the guaranteed shall supply the
guarantee-providing agency with the signed loan agreement and a written
commitment certified by the managing agency (if any), made according to a set
form, for completion of the guarantee dossier.
4. Approval by the Prime Minister:
After receiving the report from the
guarantee-providing agency, the Government Office shall propose the Prime
Minister:
a/ To approve contents of the letter of
guarantee and assign the Finance Ministry to provide guarantees;
b/ To assign the Justice Ministry to give legal
opinions on the loan agreement, the letter of guarantee, the guarantor and the
guaranteed;
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5. Issuance of the letter of guarantee, giving
of legal opinions and registration of the loan
a/ Issuance of the letter of guarantee: Within
10 working days after the guarantee provision dossier is completed, the
guarantee-providing agency shall issue the letter of guarantee in four (4)
originals, of which one shall be kept by the guarantee-providing agency in the
dossier, one kept by the guaranteed, one kept by the Justice Ministry and one
sent to the lender through the guaranteed. At the same time, the
guarantee-providing agency shall send the Justice Ministry an official letter
enclosed with the official letter of guarantee already deposited at the Justice
Ministry so that the latter can give its legal opinions on the contents already
decided by the Prime Minister;
b/ Registration of the loan: After the letter of
guarantee is issued, the guaranteed shall register the loan with the State Bank
according to the provisions of Article 6 of Decree No. 134/2005/ND-CP of
November 1, 2005, promulgating the Regulation on management of foreign
borrowing and foreign debt payment;
c/ Certification of the recipient of the
procedural dossier: If the legal procedures specified in the loan agreement and
the letter of guarantee are court procedures, the guarantee-providing agency
shall coordinate with the Foreign Affairs Ministry in designating an
appropriate overseas Vietnamese representation to act as the recipient of the
procedural dossier for the guaranteed and the guarantee-providing agency;
Basing itself on the consent of the Foreign
Affairs Ministry and the request enclosed with the authorization form of the
guarantee-providing agency, the authorized Vietnamese representation shall sign
for certification a written agreement to act as a recipient of procedural
dossiers, then forward it to the guarantee and send its copies to the
guarantee-providing agency;
d/ Giving of legal opinions on guarantees and
the loan agreement: As proposed by the guarantee-providing agency, within 10
working days the Justice Ministry shall issue its written legal opinions in two
(2) originals, of which one shall be sent to the guarantee and another kept by
the Justice Ministry.
6. For special projects important to the
national economy, which are entitled to guarantees and exempted from
examination by the Prime Minister; or commercial loans which are accompanied
with non-refundable aids or ODA loans to constitute a funding source in form of
syndicated credits (projects already designated according to accompanying
funding sources), the order of considering guarantees shall comply with the
provisions of Clauses 3, 4 and 5 of this Article.
Article 12.- Contents
of letters of Government guarantee
1. A letter of Government guarantee must have
the following contents:
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b/ The guaranteed;
c/ Reference to the relevant commercial
contracts and the loan agreement;
d/ Proposed guarantee level and loan currency;
e/ The guarantee-providing agency's commitment
toward the guarantee to perform the guaranteed's obligations and its own
obligations;
f/ Benefits and responsibilities of the
guarantee;
g/ Valid duration and time limit for withdrawal
of the letter of guarantee;
h/ The governing law and the agency, place for
and language to be used in the settlement of disputes when they arise;
i/ Place and date of signing for issuance of the
letter of guarantee.
2. Other contents may be agreed upon by the
involved parties but must not affect benefits of the guarantee-providing agency
and the guaranteed and contravene the provisions of Vietnamese law.
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Letters of Government guarantee are withdrawn as
soon as all guaranteed debt payment obligations are fulfilled.
Chapter V
GUARANTEE CHARGE
Article 14.- Guarantee
charge
The guarantee-providing agency shall base itself
on results of examination of financial plans of projects to set specific charge
rate for each program or project depending on its risk level, which must not
exceed 1.5%/year of the guaranteed debit balance. The guarantee charge rates
are specified in Appendix III to this Regulation.
Article 15.- Collection
of guarantee charge
1. Guarantee charge is calculated in the foreign
currency in which the loan agreement has been signed and shall be collected
once every six months on the date of payment of the loan interest in that
foreign currency or in Vietnam dong at the selling rate announced by the Bank
for Foreign Trade of Vietnam at the time of guarantee charge payment.
2. Guarantee charge is paid into the
accumulation fund for foreign debt payment under the Finance Ministry's
guidance.
3. If the guaranteed delays the payment of
guarantee charge, it shall bear the interest on the delayed guarantee charge
amount. The applicable interest rate is equal to 150% of the average interest
rate applied to six-month deposits by four commercial banks (the Bank for
Foreign Trade of Vietnam, the Bank for Investment and Development of Vietnam,
the Industrial and Commercial Bank of Vietnam and the Vietnam Bank for
Agriculture and Rural Development) and the number of days of delayed payment.
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ASSETS TO BE MORTGAGED
FOR GOVERNMENT-GUARANTEED LOANS
Article 16.- Assets to
be mortgaged
1. Assets formed with Government-guaranteed
foreign loans may be mortgaged to secure the performance of the borrower's
obligations toward the guarantee-providing agency in proportion to the ratio of
capital forming those assets.
2. It is forbidden to use assets formed with
guaranteed capital to ensure the performance of other civil obligations.
3. Mortgaged assets must neither be sold nor
exchanged unless it is so agreed by the guarantee-providing agency. In case of
sale of mortgaged assets, the proceeds from the sale or assets formed with
those proceeds become mortgaged assets in replacement of the sold assets.
4. Registration of mortgage: After the
guarantee-providing agency issues a letter of guarantee, the guaranteed shall
register the mortgage as security for Government guarantees according to the
provisions of law on registration of security transactions.
Article 17.- Handling
of mortgaged assets
1. If the guaranteed fails to perform or to fulfil
all debt payment obligations and the guarantee-providing agency fulfils all
those obligations on the guaranteed's behalf but the guaranteed is incapable of
refunding the paid debt amounts to the guarantee-providing agency, the
mortgaged assets shall be handled in order to recover debts for the
guarantee-providing agency.
2. The modes of handling mortgaged assets shall
comply with the provisions of law on security transactions.
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Mortgaged assets shall be released according to
the provisions of law on security transactions.
Chapter VII
REALIZATION OF
GOVERNMENT GUARANTEE
Article 19.- For the
guarantee-providing agency
When debts come due, if the guaranteed fails to
perform or to fulfil all debt payment obligations, the guarantee-providing
agency shall pay those debts according to its commitment in the letter of
guarantee. The guaranteed shall refund the guarantee-providing agency all debt
amounts it has paid on the guaranteed's behalf plus all expenses actually
arising in relation to the debt payment.
Article 20.- For the
guaranteed
1. The guaranteed has the obligations:
a/ To supply the guarantee-providing agency with
the dossier of provision of Government guarantee and relevant necessary
documents so that the latter can examine them and propose the Prime Minister to
decide on guarantees;
b/ To fulfil the borrower's obligations under
the signed loan agreement and the guaranteed's obligations toward the
guarantee-providing agency under this Regulation;
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d/ To supply the guarantee-providing agency
periodically and when necessary with financial statements already audited or
certified by a superior state financial management agency; to report on the
plan and situation of withdrawal of loan capital, debt payment and debit
balance; to report on the program or project execution and special
circumstances which may affect the program or project execution and the
capability to perform the payment obligations under the loan agreement in
strict compliance with the guarantee-providing agency's requests and
regulations;
e/ To create conditions for the
guarantee-providing agency to inspect the program or project execution when
necessary;
f/ To pay guarantee charge on time and in full
according to the provisions of this Regulation;
g/ To strictly and fully perform the obligations
already committed with the guarantee-providing agency in its written commitment
made according to a set form.
2. If the guaranteed fails to perform or to
fulfil all debt payment obligations upon debt maturity, it shall notify its
incapability to pay debts in writing to the guarantee-providing agency at least
45 days before the debts come due, clearly stating the reasons for its
incapability and committing to refund the debt amounts to be paid by the
guarantee-providing agency on its behalf plus all expenses actually arising in
relation to the debt payment.
3. After getting its debts paid on its behalf,
the guaranteed shall sign a compulsory lending agreement under the following
specific conditions:
a/ Applicable interest rate: Any interest rate
higher than the following two interest rates: (i) interest rate stated in the
loan contract; (ii) LIBOR/six months for the loan currency stated in the loan
contract plus 2%/year. The interest calculation duration shall be counted from
the date the guarantee-providing agency pays the debts on the guaranteed's
behalf to the date the guarantee-providing agency recovers those amounts.
b/ Compulsory lending term: The compulsory
lending term shall be considered depending on each project's debt payment
capability but must not exceed five years.
c/ The compulsory loan source comes from the
accumulation fund for payment of foreign debts.
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Article 21.- Assignment
or transfer of guaranteed obligations
Assignments or transfers related to Government
guarantees must be approved by the guarantee-providing agency. The assignee or
transferee has obligations toward the guarantee-providing agency in proportion
to the scope of the assignment or transfer from the guaranteed.
Chapter VIII
REPORTING REGIME,
INSPECTION AND SUPERVISION
Article 22.- Reporting
regime
The guaranteed shall make the following reports
in strict compliance with the Government's Decree No. 134/2005/ND-CP of
November 1, 2005, promulgating the Regulation on management of foreign
borrowing and foreign debt payment:
1. Report on capital withdrawal (indicating the
date and value of each capital withdrawal) within the guaranteed loan.
2. Report on progress of capital withdrawal and
quarterly debt payment for the guaranteed loan, made according to a set form
(not printed herein).
3. Report on quarterly debt payment for the
guaranteed loan.
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5. Report on assessment of the project upon its
completion.
Article 23.- Inspection
and supervision
1. The guarantee-providing agency shall
regularly supervise the performance of the guaranteed's obligations;
2. If the guaranteed fails to pay debts
according to Article 20 of this Regulation, the guarantee-providing agency
shall inspect the financial status of the project, identify reasons for its
insolvency and report remedies to the Prime Minister.
Chapter IX
HANDLING OF VIOLATIONS
Article 24.-
Organizations and individuals that violate the provisions of this Regulation
shall, depending on the nature and severity of their violations, be
administratively handled or examined for penal liability, and pay damages
according to current regulations.
APPENDIX I
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1. Contents of examination
a/ Examination of data in the
dossier of application for guarantee, for the purpose of working out the basic
financial plan.
b/ Examination of the investment
capital structure, clearly identifying (i) the investment capital source
(including own capital and borrowed capital); and (ii) the project’s loan
repayment capability;
c/ Examination of financial
statements of the latest three years which have been audited or certified by
the competent agency. For an enterprise that has operated for less than three
years, its managing agency or parent company/companies being strategic shareholders
should make a written commitment to secure the debt payment capability of the
guaranteed.
d/ Examination of criteria for
evaluation of financial plans by the following methods.
2. Examining methods
a/ Analysis and evaluation based
on the “debt service coverage ratio”: This ratio shows a project’s capability
to repay all its loans according to the cash flow analysis chart.
- Input cash flow of the project
means net income of the project.
- Output cash flow of the
project means operation expenses, depreciation, other payables (if any), taxes
(VAT, enterprise income tax), loan interests accounted as expenses, etc.
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* Evaluation results: If the
debt service coverage ratio of the basic plan is 1 or higher right in the first
year of production, the project is evaluated to be of low risk and fully
capable of paying debts right from the first year (if no big change occurs). In
case of a deficit in the first years of production, the investor shall devise a
practical and feasible plan on arrangement of a capital source to offset that
deficit.
b/ Analysis of the sensitivity
based on the “guaranteed foreign debt service coverage ratio”: This ratio shows
a project’s capability to repay its Government-guaranteed foreign loans
according to the chart of cash flow analysis to calculate its debt payment
capability upon a fluctuation of foreign exchange rate as compared to the basic
plan.
c/ Analysis of the sensitivity
based on “revenue”: This ratio shows a project’s capability to repay its
Government-guaranteed foreign loans according to the chart of cash flow
analysis to calculate its debt payment capability upon a change in its revenue
as compared to the basic plan.
d/ Analysis of the sensitivity
based on “production expenses/operation expenses”: This ratio shows a project’s
capability to repay its Government-guaranteed foreign loans according to the
chart of cash flow analysis to calculate its debt payment capability upon a
change in its operation expenses as compared to the basic plan.
APPENDIX III
TABLE OF GUARANTEE CHARGE RATES
Average debt service coverage
ratio in the first five years of a project’s operation
Types of project (Ratio) Guarantee
charge rate
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1.1) Ratio
≥ 1.15 0.25%/year
1.2) 1.10
≤ ratio < 1.15 0.4%/year
1.3) 1.05
≤ ratio < 1.10 0.5%/year
1.4) 1.00
≤ ratio < 1.05 0.6%/year
1.5) 0.95
≤ ratio < 1.00 0.7%/year
1.6) 0.90
≤ ratio < 0.95 0.8%/year
1.7) 0.85
≤ ratio < 0.90 0.9%/year
1.8) 0.80
≤ ratio < 0.85 1.0%/year
1.9) 0.75
≤ ratio < 0.80 1.1%/year
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1.11) 0.65
≤ ratio < 0.7 1.3%/year
Group 2: Other projects
2.1) Ratio
≥ 1.30 0.25%/year
2.2) 1.25
≤ ratio < 1.30 0.4%/year
2.3) 1.20
≤ ratio < 1.25 0.5%/year
2.4) 1.15
≤ ratio < 1.20 0.6%/year
2.5) 1.10
≤ ratio < 1.15 0.7%/year
2.6) 1.05
≤ ratio < 1.10 0.8%/year
2.7) 1.00
≤ ratio < 1.05 0.9%/year
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2.9) 0.90
≤ ratio < 0.95 1.1%/year
2.10) 0.85
≤ ratio < 0.90 1.2%/year
2.11) 0.80
≤ ratio < 0.85 1.3%/year
2.12) 0.75
≤ ratio < 0.80 1.4%/year
2.13) 0.70
≤ ratio < 0.75 1.5%/year
Group-1 projects with a ratio of
under 0.65% and group-2 projects with a ratio of under 0.7% are considered
incapable of paying debts, inefficient and not entitled to guarantees.-