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08-05-2023, 11:43 AM
This is official document from the Vietnam Ministry of Finance to the Ministry of Defense on March 15,2023 (Doc number:407/BQP-KHĐT).The doc is about the Ministry of Finance's comments on the repayment method of the credit agreement.
About program on debt repayment to Russia. the Governments of Vietnam and Russia signed credit agreement in 2011 worth $2 billion for the purchase of military equipment. In accordance with international practice, the debt was repaid through the SWIFT system using the U.S. dollars. The debt is repaid directly by Ministry of Defense with a special fiscal budget, with a portion of the proceeds from foreign exchange reserves serving as a financial guarantee.
However, in the context of Russia being subject to mandatory embargo measures by the U.S. and the West, such as removing Russia out of the SWIFT system, sanctioning Russian companies and financial institutions and etc.
Vietnam has also been affected by this situation that can't been able to repay its debt as usual or that debt repayments have been delayed. And the Russian Finance Department has repeatedly advised Vietnam to settle in Rub or VND so as not to affect future defense cooperation between the two countries.So, Vietnam wants to continue negotiations with Russia to suspend or defer debt payments and no interest will accrue on the above overdue debt in the credit agreement. And consider using PVN's (PetroVietnam) profits from Rusvietpetro to pay off the debt.
And the doc also mentions that Vietnam wants to achieve the most important strategic and defense security partner relationship with Russia through arms transaction. Even though it may cause sanctions from the U.S CAASTA, as the U.S. has continuously pressured Vietnam to turn to America for arms purchases in the past, or else it will sanction Vietnam though CAASTA as well. However, it should be unlikely that America will do so, because Vietnam has taken the initiative to communicate with the U.S about the historical relationship between Vietnam and Russia, emphasizing that the purchase of Russian weapons in only for the protection of national defense security and it's not intended to challenge of infringe on American interests. And on the other hand, the U.S. also values the role of Vietnam in the implementation of the Indo-Pacific Strategy.
Vietnam has had enough experience with the process of repaying the debt on schedule under the 2011 credit agreement process and in secrecy, it is believed that soon the two governments will be able to communicate and finalize a new credit agreement on the security and confidentiality of the new agreement and the methodology for repayment of the debt.
Based on the above analytical assessment, MF recommends that MD unified the plan with Government by sending a official letter to Russia to emphasize the importance that Vietnam attaches to a new credit agreement with Russia for the purchase of armaments that will be produced by Russia at a later date.
About program on debt repayment to Russia. the Governments of Vietnam and Russia signed credit agreement in 2011 worth $2 billion for the purchase of military equipment. In accordance with international practice, the debt was repaid through the SWIFT system using the U.S. dollars. The debt is repaid directly by Ministry of Defense with a special fiscal budget, with a portion of the proceeds from foreign exchange reserves serving as a financial guarantee.
However, in the context of Russia being subject to mandatory embargo measures by the U.S. and the West, such as removing Russia out of the SWIFT system, sanctioning Russian companies and financial institutions and etc.
Vietnam has also been affected by this situation that can't been able to repay its debt as usual or that debt repayments have been delayed. And the Russian Finance Department has repeatedly advised Vietnam to settle in Rub or VND so as not to affect future defense cooperation between the two countries.So, Vietnam wants to continue negotiations with Russia to suspend or defer debt payments and no interest will accrue on the above overdue debt in the credit agreement. And consider using PVN's (PetroVietnam) profits from Rusvietpetro to pay off the debt.
And the doc also mentions that Vietnam wants to achieve the most important strategic and defense security partner relationship with Russia through arms transaction. Even though it may cause sanctions from the U.S CAASTA, as the U.S. has continuously pressured Vietnam to turn to America for arms purchases in the past, or else it will sanction Vietnam though CAASTA as well. However, it should be unlikely that America will do so, because Vietnam has taken the initiative to communicate with the U.S about the historical relationship between Vietnam and Russia, emphasizing that the purchase of Russian weapons in only for the protection of national defense security and it's not intended to challenge of infringe on American interests. And on the other hand, the U.S. also values the role of Vietnam in the implementation of the Indo-Pacific Strategy.
Vietnam has had enough experience with the process of repaying the debt on schedule under the 2011 credit agreement process and in secrecy, it is believed that soon the two governments will be able to communicate and finalize a new credit agreement on the security and confidentiality of the new agreement and the methodology for repayment of the debt.
Based on the above analytical assessment, MF recommends that MD unified the plan with Government by sending a official letter to Russia to emphasize the importance that Vietnam attaches to a new credit agreement with Russia for the purchase of armaments that will be produced by Russia at a later date.
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