How to supervise the repayment and risks of foreign debt

Our country’s sovereign foreign debts are repaid uniformly by the state, and other non-sovereign foreign debts are subject to the principle of self-repayment, etc. These regulations are all manifestations of our country’s supervision of the repayment and risks of foreign debts. Let the editor of Legal Savior Network explain the foreign debts Let’s introduce the specific regulations on repayment and risk supervision.

How to supervise the repayment and risks of foreign debt

The repayment of foreign debt is implemented in The principle is that sovereign foreign debts shall be repaid uniformly by the state, while non-sovereign foreign debts shall be repaid by themselves. Sovereign foreign debt funds are on-lent by the Ministry of Finance to domestic debtors directly or through financial institutions, and domestic debtors shall bear repayment obligations to the Ministry of Finance or the on-lending financial institutions. Debtors of non-sovereign foreign debts may use their own foreign exchange funds to repay foreign debts, or may use RMB to purchase foreign exchange to repay foreign debts with the approval of the foreign exchange management department. If there is a guarantor for a foreign debt that the debtor cannot repay, the guarantor shall be responsible for repaying it. When the guarantor needs to perform external compensation obligations in accordance with the provisions of the guarantee contract, it shall go to the foreign exchange management department to go through the approval procedures for external guarantee performance.

Debtors should strengthen foreign debt risk management and make timely adjustments and optimizations Debt structure. On the premise of not expanding the original scale of foreign debt, with the approval of the National Development and Reform Commission, debtors can reduce the cost of foreign debt and optimize the debt structure by borrowing low-cost foreign debt and repaying high-cost foreign debt. Among them, those involving sovereign foreign debt must be approved by the Ministry of Finance. For the purpose of hedging, the debtor can entrust a qualified financial institution to use financial instruments to avoid the exchange rate and interest rate risks of foreign debt.

The foreign debt management department shall supervise foreign debt and external guarantees in accordance with national laws, regulations and the relevant provisions of the "Measures for the Administration of External Guarantees by Domestic Institutions". When the foreign debt management department performs its supervisory duties, it has the right to require debtors and relevant units to provide relevant information and inspect relevant accounts and assets.

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