Laws of Vietnam

THE PRIME MINISTER

Pursuant to the Government's Decree No. 131/2006/ND-CP of November 9, 2006, promulgating the Regulation on Official Development Assistance (ODA) management and use;

At the proposal of the Minister of Finance,

DECIDES:

Article 1.- To promulgate together with this Decision the Regulation on re-lending of the Government's foreign loan and aid capital.

Article 2.- This Decision takes effect 15 days after its publication in "CONG BAO."

Ministers, heads of ministerial-level agencies, heads of government-attached agencies and presidents of provincial/municipal People's Committees shall implement this Decision.

Prime Minister
NGUYEN TAN DUNG

Chapter I

GENERAL PROVISIONS

Article 1.- Governing scope

This Regulation governs relations arising when the Government re-lends capital from its foreign loan and aid sources to domestic organizations, enterprises and local administrations.

Article 2.- Interpretation of terms

The terms used in this Regulation have the same meanings as interpreted in the Government's Decision No. 134/2005/ND-CP of November 1, 2005, promulgating the Regulation on management of foreign loans and payment of foreign debts. The terms below are construed as follows:

1. "Re-lending" means that the Finance Ministry on behalf of the Government:

a/ Directly re-lends or authorizes another agency to re-lend all or part of the Government's foreign loan and aid capital to enterprises for investment in projects with capital recoverability;

b/ Re-lends capital to domestic credit institutions for further lending under a credit program or a credit component of a project using foreign loans; or,

c/ Re-lends capital to provincial/municipal People's Committees under law or the Prime Minister's decisions.

2. "Foreign loan or aid agreement" means a treaty concluded by the Vietnamese Government or State or its authorized agency with a foreign party(ies) in order to provide capital for Vietnam to implement programs or projects.

3. "Donor or lender" means a foreign party that finances a program or project.

4. "Re-lending authorization contract" means a contract signed between the Finance Ministry and a re-lending agency.

5. "Accounting exchange rate" means the exchange rate set by the Finance Ministry for accounting and reporting on foreign exchange revenues and expenditures belonging to the state budget.

6. "Re-lending charge" means a kind of charge collected by the Government via re-lending agencies from borrowers in case of re-lending the Government's foreign commercial loans. The re-lending charge is determined and applied similarly as the Government's guarantee charge mentioned in the Regulation on the grant 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.

7. "Re-lending service charge" means a charge payable by the Finance Ministry to re-lending agencies in case the former authorizes the latter to manage and retrieve debts and does not bear credit risks.

Article 3.- Conditions for re-borrowing

1. For enterprises and economic organizations:

a/ Having programs or projects using foreign loan or aid capital which meet the following criteria:

- Conforming to the State's development investment plan;

- Completing investment procedures in accordance with the State's current regulations;

- Being allowed by the Government to use loan or aid capital and approved by the donor (in case a foreign loan agreement requires donor approval);

- Being capable of paying debts under the financial scheme evaluated according to regulations.

b/ Having a healthy financial status, suffering no losses for latest three years, owing no overdue debts to credit institutions or the Government with regard to foreign loan or aid capital they have been re-lent (for operating organizations or enterprises) at the time of re-borrowing, owing neither outstanding nor overdue debts to the state budget. For enterprises which have operated for less than full 3 years, the commitment of their owners or parent companies is required.

c/ Providing security for the re-borrowed money at the request of the re-lending agency, unless it is exempt under Article 11 of this Regulation.

2. For credit institutions:

a/ Being allowed by the Government to use loan or aid capital and approved by the donor (in case a foreign loan agreement requires donor approval);

b/ Being capable of paying debts according to the evaluated financial scheme.

3. For provincial/municipal People's Committees:

a/ Being allowed by law or the Prime Minister to re-borrow the Government's foreign loan or aid capital;

b/ The re-borrowed capital is to be used for development investment according to the spending tasks of local budgets;

c/ Local budgets are capable of paying debts.

Chapter II

RE-LENDING CONDITIONS

Section 1. COMMON CONDITIONS APPLICABLE TO ALL RE-LENDING CASES

Article 4.- Re-lending currency

1. With regard to the Government's ODA capital: Re-borrowers may select Vietnamese currency (Vietnam dong) or the original foreign loan currency as the re-lending currency, depending on their debt payment capability. The rate of exchange of a foreign currency into Vietnam dong is the one set by the Finance Ministry.

2. With regard to the Government's foreign commercial loans: Re-borrowers must acknowledge debts in the original foreign currencies in which the Government has borrowed foreign capital, except for special cases decided by the Prime Minister.

3. In case of re-lending to provincial/municipal People's Committees: The re-lending currency is the original foreign currency in which the Government has borrowed foreign capital.

Article 5.- Debt retrieval currency

1. With regard to ODA capital: In principle, re-borrowers shall pay debts in the currency in which they have re-borrowed money. If a re-borrower wishes to pay debts to the Government in Vietnam dong or a freely convertible foreign currency other than that in which it has re-borrowed money, the re-lending agency shall apply the foreign exchange rate set by the Finance Ministry or already agreed with the re-borrower and stated in the re-lending agreement in order to retrieve the debt.

2. With regard to commercial loans: The debt payment currency is the original foreign loan currency. If a debt is paid in Vietnam dong, the re-lending agency shall apply the selling exchange rate of a servicing bank or the Bank for Foreign Trade of Vietnam, in case there is no servicing bank to retrieve the debt.

Article 6.- Re-lending value

1. The re-lending value stated in a re-lending agreement is determined on the basis of the value of the loan or aid agreement signed with a donor or a lender for each program or project. If a foreign loan or aid agreement is signed for multiple projects but does not specify the level of allocation to each program or project, the re-lending value shall be determined on the basis of the Government's decision on allocation of loan or aid capital.

2. The actually acknowledged debt value is the value accumulated through capital withdrawals.

Article 7.- Debt acknowledgement time

1. With regard to capital withdrawals made in the form of letters of credit (L/C), direct payment or refund, the time a re-borrower acknowledges debt with the re-lending agency is the time of capital disbursement according to the donor's notice.

2. With regard to capital withdrawals made in the form of special accounts or advance payment accounts:

If multiple projects or programs under the same loan or aid agreement use the same special account or advance payment account, the time a borrower acknowledges debt with the re-lending agency is the time of capital withdrawal from that account.

If a loan or aid agreement serves only one project and uses one special or advance payment account, the time a re-borrower acknowledges debt with the re-lending agency is the time the donor or the lender transfers capital into that account.

3. Based on the donor's or the lender's disbursement report or voucher of payment from the special or advance payment account, the Finance Ministry shall make a notice or an entry of revenue or expenditure for the re-lending agency according to the value and date of disbursement to each project or program under the loan or aid agreement.

Re-lending agencies shall notify re-borrowers of debt acknowledgement and collection according to notices or expenditure records of the Finance Ministry. If re-borrowers disagree with data in their notices or expenditure records of the Finance Ministry, re-lending agencies shall immediately report thereon to the Finance Ministry for handling.

Article 8.- Number of days for interest calculation

1. With regard to commercial loan capital: The number of days used for calculation of re-lending and late payment interest is calculated according to the relevant foreign loan agreement.

2. With regard to ODA capital: The re-lending and late payment interest is calculated on the actual number of days during which the capital is used, with a year presumed to have 360 days.

Article 9.- Late payment interest

If a re-borrower fails to pay the principal, interest, re-lending charges and other payable amounts on schedule, it is liable to pay a late payment interest at an interest rate equal to 150% of the one stated in the re-lending agreement or the one stated in the original loan agreement, whichever is higher. The late payment interest is calculated from the date a debt comes due to the date it is actually paid, if the payment is made 15 days or more after the due date.

Article 10.- Charges

Re-borrowers shall pay the following charges:

1. Charges to be collected by foreign parties: Based on specific loan agreements, these charges may include management charge, commitment charge, capital withdrawal charge, insurance premiums and others. Re-borrowers shall pay these charges directly to donors. If the Government pays these charges, re-borrowers shall refund them to the state budget.

2. Service charges to be collected by servicing banks: Re-borrowers shall pay directly to servicing banks according to the banks' regulations.

Article 11.- Mortgages and measures to secure loans

1. Re-borrowers shall mortgage assets or take other measures to secure their capability of offsetting credit risks and other possible risks, including assets created from the Government's re-lent capital and/or other assets prescribed by law, except for those entities that are exempt from asset mortgage or loan security, including:

a/ Provincial/municipal People's Committees;

b/ Financial and credit institutions;

c/ Cases which are permitted by the Prime Minister to apply pledge of trust or be exempt from asset mortgage or loan security (for all or a part of a loan).

2. Commitments on mortgages and loan security are stated in re-lending agreements. Re-lending agencies shall prepare adequate legal dossiers on mortgages and loan security in accordance with law.

3. Re-lending agencies shall manage and handle mortgages and loan security for the Government's re-lent capital according to general regulations on management of mortgages and loan security.

If the Finance Ministry is the re-lending agency, it shall manage and handle mortgages and loan security for re-lent capital according to the Regulation on the grant 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.

Section 2. RE-LENDING CONDITIONS APPLICABLE TO SPECIFIC CASES

Article 12.- Re-lending of the Government's foreign commercial loan capital

1. The re-lending interest rate is determined on the basis of the foreign lending interest rate plus the re-lending charge.

2. Re-lending term:

a/ Re-lending to programs and projects of enterprises:

The time limit for payment of principal capital to the Finance Ministry is determined on the basis of the capital recovery time stated in the investment project already approved by a competent authority and the re-evaluation results given by the re-lending agency but must not exceed the foreign loan term.

A grace period shall be determined by the Finance Ministry based on the construction time until a work is put into operation as stated in the relevant investment project already approved by a competent authority, and the re-evaluation results of the re-lending agency.

b/ With regard to credit programs and limits to be re-lent to credit institutions under commercial conditions, the re-lending must comply with the foreign loan conditions.

Article 13.- Re-lending of the Government's ODA capital to enterprises under programs or projects

1. Re-lending interest rate:

a/ Re-lending in Vietnam dong:

The re-lending interest rate shall be determined according to the relevant econo-technical branch and must not exceed the interest rate of the State's development investment credit prescribed for each period. Some branches and domains listed in Appendix I to this Regulation are eligible for a preferential interest rate equal to 33.3% or 55.5% of that applicable to state investment credit. This interest rate includes the re-lending service charge. In case of a change in the interest rate of state investment credit, the preferential interest rate will also change accordingly.

The re-lending interest rate shall be kept unchanged throughout the re-lending term.

b/ Re-lending in foreign currencies:

The re-lending interest rate is equal to the one applied to cases of re-lending in Vietnam dong specified in Item (a) above, minus the corresponding foreign exchange risk ratio of the re-lending currency, but must be neither lower than the foreign lending interest rate nor higher than two-thirds (2/3) of the commercial international reference rate (CIRR) announced by the Organization for Economic Cooperation and Development (OECD) at the same time of determination of the re-lending interest rate.

Based on fluctuations of Vietnam dong exchange rate corresponding to each foreign currency and Vietnam's average inflation rate over the past five years, compared with other countries/regions such as the US, the EU and Japan, the exchange rate risk ratios to be applicable to the US dollar (USD), Euro (EUR) and Japanese Yen (JPY) from the time this Regulation takes effect till the end of March 15, 2008, are specified in Appendix II. Annually, not later than March 15, based on fluctuations of the financial and monetary market, the Finance Ministry shall calculate and announce the exchange rate risk ratio of the above three foreign currencies, to be applicable to the end of March 15 of the subsequent year. In case of big fluctuations, the Finance Ministry may announce other exchange rate risk ratios right in the application period.

If the original foreign currency in a loan agreement is other than one of the above-mentioned foreign currencies, the applied exchange rate risk ratio is the USD exchange rate risk ratio.

Once determined, the re-lending interest rate shall be kept unchanged throughout the re-lending term.

2. Re-lending term

a/ A time limit for payment of principal capital shall be determined by the Finance Ministry according to the capital recovery time limit stated in the investment project documents already approved by a competent authority for each project, or the re-evaluation results of the re-lending agency;

b/ A grace period shall be determined by the Finance Ministry based on the construction period and last until the relevant program or project is put into operation as mentioned in the investment project documents already approved by a competent authority, and the re-evaluation results of the re-lending agency;

c/ The time for starting calculation of the grace period and the payment deadline is the first day of capital withdrawal for a program or project (unless the donor otherwise requests);

d/ Re-borrower may pay debts ahead of time but shall notify such to the re-lending agency and the Finance Ministry at least 30 days before paying debts.

Article 14.- Re-lending of ODA capital to credit and credit limit programs of credit institutions

1. Re-lending interest rate:

a/ Re-lending in Vietnam dong: The re-lending interest rate is determined according to Point a, Clause 1, Article 13 of this Regulation;

b/ Re-lending in foreign currency: The re-lending interest rate is determined according to Point b, Clause 1, Article 13 of this Regulation;

c/ Credit institutions may decide on re-lending interest rates applicable to end-users of capital and bear credit risks for those loans. They are also eligible for the difference between their lending interest rates and the Finance Ministry's re-lending interest rate.

2. Re-lending term:

A re-lending term is equal to the term of the Government's relevant ODA loan agreement but must not exceed 20 years (including the grace period).

Article 15.- Re-lending to provincial/municipal People's Committees

1. The re-lending currency is the foreign currency identified in the loan agreement signed between the Government and a donor.

2. The re-lending interest rate is equal to the Government's foreign loan interest rate.

3. The re-lending term covers the principal payment term and the grace period and shall be kept unchanged under the relevant foreign loan agreement of the Government.

Article 16.- Special cases

If a donor requests that the re-lending must be subject to conditions other than those prescribed in this Regulation, the Finance Ministry shall assume the prime responsibility for consulting concerned agencies and report thereon to the Prime Minister for decision.

Article 17.- Domestic re-lending service charge

1. The re-lending service charge is equal to 1.5% of an actually retrieved debt amount (including the principal, interest and late payment interest, if any), regardless of the debt-retrieval currency.

2. The re-lending service charge shall be notified by the re-lending agency to the Finance Ministry in each debt collection period and the re-lending agency may deduct the charge from the actually collected debt amount before transferring it to the Finance Ministry.

Chapter III

RE-LENDING PROCEDURES

Article 18.- Forms of authorization for re-lending

Depending on practical conditions, the Finance Ministry may reach agreement with its authorized agencies and organizations to re-lend borrowed capital in one of two following forms:

1. For loans re-lent under programs/projects: Re-lending agencies shall manage and recover these amounts but do not bear credit risks. In this case, re-lending agencies are entitled to the re-lending service charge prescribed in Article 17 of this Regulation.

2. For loans re-lent under credit programs or credit limits of credit institutions: Re-lending agencies may select re-borrowers, take responsibility for evaluating re-borrowing projects, set re-lending interest rates and bear credit risks. In this case, re-lending agencies are entitled to the difference between the lending interest rate applicable to end-re-borrowers and the Finance Ministry's re-lending interest rate.

Article 19.- Evaluation, approval of re-borrowing programs and projects

1. With regard to ODA loans re-lent to enterprises under programs or projects:

The Ministry of Planning and Investment shall assume the prime responsibility for, and coordinate with the Finance Ministry in, submitting to the Prime Minister for approval lists of projects to be re-lent with the Government's loan or aid before framework treaties or agreements on project portfolios are concluded with foreign parties.

The project evaluation and approval comply with the Government's Decree No. 131/2006/ND-CP of November 9, 2006, promulgating the Government's Regulation on ODA management and use; Decree No. 134/2005/ND-CP of November 1, 2005, promulgating the Regulation on management of foreign loans and payment of foreign debts; and Decree No. 108/2006/ND-CP of September 22, 2006, detailing and guiding the implementation of a number of articles of the Investment Law. The evaluating agency shall take responsibility before law for projects' efficiency and capability of paying debts to the state budget, and for evaluation results.

Re-lending agencies shall re-evaluate financial schemes of re-borrowing projects, the re-borrowers' financial capacity and report re-evaluation results to the Finance Ministry before concluding re-lending agreements.

2. With regard to ODA loans re-lent to credit institutions under credit programs or credit limits:

The Finance Ministry shall evaluate loan use plans and debt payment plans of credit institutions participating in the programs before signing re-lending agreements.

Credit institutions shall provide loans to the end-users of capital, evaluate projects and select subsequent re-borrowers according to credit programs already agreed upon with donors or lenders, and concurrently bear all risks in the course of re-lending to those entities.

3. With regard to credit programs or credit limits subject to commercial conditions in re-lending to credit institutions:

The State Bank of Vietnam shall evaluate loan capital use plans and debt payment plans of credit institutions participating in programs and notify evaluation results to the Finance Ministry.

Credit institutions lending capital to end-users shall evaluate projects and select subsequent re-borrowers according to the credit programs already agreed upon with donors or lenders, and concurrently bear all risks in the course of re-lending to those subjects.

4. With regard to the Government's commercial loans re-lent to enterprises:

Re-lending agencies shall re-evaluate financial plans of re-borrowing projects and financial capacity of re-borrowers, and report re-evaluation results to the Finance Ministry before signing re-lending agreements.

5. Re-lending to provincial/municipal People's Committees:

The Finance Ministry shall evaluate the local budgets' debt payment capacity according to current regulations on budget decentralization.

In case the Finance Ministry re-lends borrowed capital to projects mentioned at Points 1 and 4 above, the re-evaluation of financial plans shall be conducted according to the Regulation on the grant 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.

Article 20.- Re-lending order and procedures

1. Determination of re-lending conditions:

A borrower shall produce to the Finance Ministry and the re-lending agency the following documents as a basis for examination of re-lending conditions:

- Project documents or program dossier/credit limit already approved by a competent authority;

- Investment-approving decision issued by a competent authority;

- The Prime Minister's written permission of the use of the Government's foreign loan or aid capital;

- Financial statements of latest three years (for operating enterprises/economic organizations); for enterprises which have operated for less than full 3 years, the financial statements of their parent companies or strategic partners and written commitments of superior managing agencies or of their parent companies or strategic shareholders ensuring their debt payment capacity are required;

- The financial plan on the use and repayment of loan capital, made on the basis of referring to framework re-lending conditions set in this Regulation.

Within 30 days after receiving the above-mentioned complete and valid documents, the re-lending agency shall re-evaluate the financial plan of the project and the borrower's financial capacity then send the re-evaluation results to the Finance Ministry. Based on the re-evaluation results, the Finance Ministry shall determine specific re-lending conditions for the project according to framework conditions set in this Regulation. In special cases in which the framework re-lending conditions cannot apply, the Finance Ministry shall consult concerned agencies and report thereon to the Prime Minister for decision.

If a project is determined to be incapable of paying debts according the re-lending conditions announced by the Finance Ministry, the Finance Ministry shall report thereon to the Prime Minister for decision not to arrange capital for that project.

2. Signing of re-lending authorization contracts

Within 15 days after determining specific re-lending conditions or getting the Prime Minister's approval, the Finance Ministry shall sign re-lending authorization contracts with re-lending agencies on the general principles according to the forms in Appendix III (not printed herein).

3. Signing of re-lending agreements:

Re-lending agencies shall sign re-lending agreements with borrowers under the conditions stated in re-lending authorization contracts signed with the Finance Ministry.

After signing a re-lending agreement, the re-lending agency shall send a copy thereof to the Finance Ministry for coordinated monitoring and management.

4. Debt acknowledgement procedures:

Based on the donors' or lenders' capital withdrawal notices or the servicing banks' notices of expenditure from special accounts, the Finance Ministry shall make entries of revenues for the state budget and expenditures for re-lending agencies so that these agencies receive capital and notify borrowers of debt acknowledgment. If the Finance Ministry directly re-lends capital, borrowers shall acknowledge debts directly with the Finance Ministry.

Immediately after receiving a notice of the expiration of the capital withdrawal time limit under a foreign loan or aid agreement, the Finance Ministry shall notify re-lending agencies or borrowers of the total capital amount already acknowledged as debts by borrowers.

Article 21.- Recovery of re-lent capital

Borrowers must pay debts to re-lending agencies on schedule and in full according to their debt payment liabilities stated in re-lending agreements.

Re-lending agencies shall pay debts on schedule and in full to the accumulated fund for foreign debt payment managed by the Finance Ministry according to their debt payment liabilities stated in re-lending authorization contracts under specific guidance of the Finance Ministry. If authorized by the Finance Ministry to pay debts directly to foreign countries, re-lending agencies shall only transfer to the Finance Ministry the remaining amount of capital after paying those debts.

In case of policy changes or adjustment of re-lending conditions, re-lending agencies or the Finance Ministry shall not refund debt amounts already collected.

Article 22.- Assignment of state management responsibility for re-lending from the Government's loan and aid sources

1. The Ministry of Planning and Investment shall:

a/ Assume the prime responsibility for, and reach agreement with the Finance Ministry on, drawing up and submitting to the Prime Minister for approval a list of programs and projects to be re-lent all or part of capital from the Government's loan or aid sources;

b/ Coordinate with the Finance Ministry in formulating a scheme on mobilization and a plan on the use of commercial loans, to be submitted to the Prime Minister for consideration and decision on a case-by-case basis.

2. The Finance Ministry, the local government agency exercising the state management of re-lending of the Government's foreign loan and aid sources, shall:

a/ Join the Ministry of Planning and Investment in drawing up and submitting to the Prime Minister for approval a list of programs and projects to be re-lent capital from the Government's ODA sources before framework treaties or agreements on project portfolios are concluded with foreign countries;

b/ Review and announce annually, not later than January 15, the interest rate bracket applicable to econo-technical branches and the levels of exchange rate risks prescribed at Point 1, Article 13 of this Regulation, based on fluctuations of the financial market, and adjust them when necessary;

c/ Assume the prime responsibility for, and coordinate with re-lending agencies and concerned agencies in determining specific re-lending conditions for programs and projects using the Government's foreign loan or aid capital according to the framework conditions set in this Regulation;

d/ Sign re-lending authorization contracts with re-lending agencies or re-lending agreements with borrowers in case the Finance Ministry directly re-lends capital;

e/ Supervise, manage and recover re-lent capital according to the terms of re-lending authorization contracts or sub-agreements or re-lending agreements;

f/ Annually or upon request, report to the Prime Minister on the management, use and recovery of re-lent Government's foreign loans or aid.

3. The State Bank of Vietnam shall evaluate capital use and debt payment plans of credit institutions participating in credit limit programs in case the Finance Ministry re-lends capital to those institutions under those programs and commercial conditions.

4. Re-lending agencies shall:

a/ Re-evaluate financial plans of projects and programs re-lent with the Government's foreign loans or aid, and the borrowers' financial capacity before concluding re-lending agreements;

b/ Manage, supervise the use of re-lent capital by borrowers. Record and account explicitly re-lent amounts of each borrower;

c/ Complete legal dossiers, manage and dispose of mortgages and other properties used by borrowers as loan security;

d/ Apply necessary lawful measures to recover fully and on schedule re-lent capital from borrowers and transfer it to the accumulated fund for foreign debt payment under the conditions specified in re-lending agreements and re-lending authorization contracts;

e/ Supply information and reports on the implementation of programs and projects to the Finance Ministry, donors or lenders on a quarterly basis or upon request;

f/ If borrowers cannot pay some or all of debts, after applying all necessary measures:

- Pay debts for borrowers if they are authorized by the Finance Ministry by mode of bearing credit risks.

- Report to the Finance Ministry and the project-evaluating agency for handling measures if re-lending agencies are authorized by the Finance Ministry to re-lend capital by mode of not bearing credit risks;

g/ Report on enterprises and organizations having programs or projects with re-lent capital but failing to pay debts on schedule to the Finance Ministry in order to include them in a list of subjects not entitled to consideration for further borrowing. Annually, the Finance Ministry shall notify the list to re-lending agencies so that the latter shall not receive borrowing dossiers from the above subjects.

5. Borrowers shall:

a/ Manage and use borrowed capital for proper purposes already approved in investment reports or feasibility study reports of projects already approved by competent authorities;

b/ Pay debts fully and on schedule to re-lending agencies under conditions in re-lending agreements signed with re-lending agencies;

c/ Strictly comply with the provisions on mortgage and loan security in Article 11 of this Regulation;

d/ Quarterly or upon request of re-lending agencies, supply information and reports on the implementation of programs and projects to re-lending agencies, the Finance Ministry and donors or lenders, and concurrently notify these agencies of circumstances which delay the progress of program or project implementation and changes related to programs and projects;

e/ Take responsibility before law for the truthfulness of information supplied to re-lending agencies.

Chapter IV

OTHER PROVISIONS

Article 23.- Non-immunity of liabilities and priority order of debt payment

1. Non-immunity of liabilities:

All complaints and disputes related to commercial contracts shall be settled by contractual parties and do not immunize borrowers from any of their liabilities under re-lending agreements.

2. Priority order of debt payment:

With regard to principals, interests and charges indicated in re-lending agreements, borrowers shall pay them in the same priority order as for any other loans of enterprises. If borrowers pay only some of their due debts, the priority order of debt payment is as follows: late payment interest, due payment interest, re-lending charges and due principal.

Article 24.- Transfer

Borrowers may not transfer or assign their arising liabilities related to re-lent capital, unless it is approved in writing by re-lending agencies.

With regard to borrowers that are state enterprises undergoing ownership transformation (equitization, merger or dissolution...), the persons issuing decisions on restructuring of enterprises shall request debt-receiving agencies to sign debt acknowledgement records with re-lending agencies and pay debts under the signed re-lending agreements.

Chapter V

ORGANIZATION OF IMPLEMENTATION

Re-lent programs and projects which are approved and implemented after the effective date of this Regulation must comply with this Regulation.

Programs and projects re-lent with capital under re-lending conditions which have been approved but not yet implemented after the effective date of this Regulation may continue applying those conditions.

Re-lending agreements, re-lending authorization contracts and loan sub-agreements signed before the promulgation of this Regulation remain valid.