Thông tư liên tịch 81/1998/TTLT/BTC-NHNN

JOINT CIRCULAR

GUIDING THE PROCESS, PROCEDURES AND MANAGEMENT OF CAPITAL WITH-DRAWAL REGARDING OFFICIAL DEVELOPMENT AID

Pursuant to the Law on State Budget, passed by the National Assembly of the Socialist Republic of Vietnam on March 20, 1996;
Pursuant to Decree No.87-CP of August 5, 1997 of the Government promulgating the Regulation on the Management and Use of Official Development Aid;
Pursuant to the provisions of Points b and e, Clause 3 of Article 14, and Clause 4 of Article 15 of Decree No.87-CP of August 5, 1997, the Ministry of Finance and the State Bank jointly provide the following guidances on the process, procedures and management of capital withdrawal regarding the official development aid:

I. GENERAL PROVISIONS

Official Development Aid (ODA) capital is a source of the State budget revenue, which must be accounted into the State budget and managed according to the provisions of the Law on State Budget and the sub-law guiding documents attached thereto.

The Ministry of Finance shall take responsibility for the financial management of capital withdrawal and settlement of projects, conducting State budget revenue and expenditure accounting regarding ODA capital sources, guiding and inspecting the observance of the regulations on financial management and final settlement of projects, and guiding and inspecting units in the transfer of assets, supplies and capital of projects upon their completion.

The State Bank shall direct the commercial banks servicing projects to send the Ministry of Finance and the concerned agencies periodical wrap-up reports on the situation of capital withdrawal and settlement of ODA-using programs and projects via the banking system.

Investors shall be accountable before law for the implementation of ODA-funded programs and projects in strict compliance with the provisions of international agreements; strictly abide by the State's regulations on financial management and the ordinance on accounting and statistics; and implement the cost-accounting accountancy regime in accordance with the current stipulations of the State. The investors shall set up management boards of ODA-funded programs and/or projects (hereafter referred to as project management board for short) for the implementation of such programs and/or projects. In cases where it is not necessary to set up a project management board, the investor shall directly perform the tasks of the management board as prescribed in this Circular.

This Circular provides guidances only on the process, procedures and management of ODA capital withdrawal. As for the domestic reciprocal capital, the capital withdrawal and settlement shall be effected in accordance with the timetable of foreign capital withdrawal and the current domestic spending regime.

II. DETAILED PROVISIONS ON CAPITAL WITHDRAWAL PROCESS

A. CAPITAL WITHDRAWAL CONDITIONS

1. General conditions:

To withdraw capital, a project must meet the following conditions:

- Having a ratified project's feasibility report (except otherwise decided by the Prime Minister),

- The international agreements concluded between Vietnam and foreign party(ies) have been adopted/ratified under the current regulations and take effect,

- With regard to projects under re-lending regime, there must be a re-lending contract signed with the Ministry of Finance or with the agency mandated to re-lend capital by the Ministry of Finance,

- Having an economic contract (for construction and installation, procurement or consultancy) which has been concluded and ratified according to regulations,

- Having an annual capital withdrawal plan which has been elaborated and registered in accordance with the ratified budget estimate of the project.

2. Banks servicing projects:

To withdraw capital for a project, the State Bank shall, after consulting the Ministry of Finance and the investor and basing itself on the aid donor's requirements, have to designate a commercial bank to serve such project. In the course of implementation of the project, the designated commercial bank shall enjoy charges in accordance with the State Bank's current regulations on service charges for payment via banks and at the same time, have to notify the Ministry of Finance, the State Bank and the investor of the situation on the capital withdrawal and payment through the project's special accounts.

3. Elaboration and registration of a project's capital withdrawal plan:

The withdrawal of capital for ODA-funded programs or projects must be based on the international agreements and the ratified annual budget estimates. The investors shall have to draft, defend and implement the annual budget estimates in accordance with the current regulations.

Basing itself on the annual detailed budget estimate of the project which has already been ratified by its parent agency, the project management board shall elaborate an ODA capital withdrawal plan. The plan's contents must be made in detail according to every quarter, every item of the project and every source of capital, including the reciprocal capital. There must be a specific plan for project's items subject to settlement through special accounts (if such program or project is entitled to apply this form of capital withdrawal). This plan must be registered with the Ministry of Finance and sent to the concerned agencies (the project-serving bank, the investment and development agency).

B. ODA CAPITAL WITHDRAWAL PROCEDURES

1. Opening accounts:

To withdraw capital for settlement, the project management board shall open appropriate transaction accounts at the project-serving commercial bank in accordance with the current regulations. As for projects using the form of special accounts for settlement, the project management board shall have to additionally open a special account using the project's name at the project-serving commercial bank in order to receive advance capital from aid donor(s).

2. Forms of ODA capital withdrawal:

Depending on the provisions of international agreements, the ODA capital withdrawal and settlement may be conducted in one or a number of the following popular forms: direct settlement, special account, covenant, capital reimbursement and money order. More concretely:

2.1. Direct settlement:

To withdraw capital in the form of direct settlement, the project management board shall prepare an application for capital withdrawal and other necessary documents to be sent to the Ministry of Finance. Such documents shall include: the capital withdrawal application made according to the prescribed form, the official dispatch requesting the capital withdrawal, the ratified economic contract (each contract shall be sent only once), the report on the pre-acceptance run and test and the contractor's written request for settlement. In cases where advance payment is made for the first time, the above-said documents are not required but there must be a bank guarantee and performance bond from the contractor's bank.

For a common case, the Ministry of Finance shall, within 5 working days and basing itself on the concluded international agreements as well as the registered capital withdrawal plan, consider, sign the capital withdrawal application and send it to the aid donor(s).

For projects with capital borrowed from the World Bank and the Asian Development Bank, the Ministry of Finance shall, within 5 working days after fully receiving a dossier, give its written opinions to the project management board and project-servicing bank. Basing itself on the written consent of the Ministry of Finance, and within 2 working days, the project-servicing bank shall sign capital withdrawal application and send it to the aid donor(s).

The aid donor's notice shall serve as basis for the Ministry of Finance to complete budget cost-accounting procedures for the project.

2.2. Settlement in form of covenant:

Covenants are usually used for the settlement of goods or service import contracts (import contracts for short). To withdraw capital for project settlement in the form of covenant, the project management board shall send to the Ministry of Finance the import contract. Within 5 working days, the Ministry of Finance shall consider and approve settlement conditions and inform the project management board thereof. Basing itself on the opinions of the Ministry of Finance, the servicing bank shall, within 2 working days, complete procedures for opening a letter of credit (L/C), sign the application proposing the issue of a covenant and send it to the aid donor.

After the issue of the covenant and on the basis of the signed contract, the aid donor shall make payment to the beneficiary. The aid donor's notice shall serve as basis for the Ministry of Finance to complete budget cost-accounting procedures for the project.

2.3. Settlement in form of special accounts:

Under this form, the aid donor(s) shall advance a sum of money into the project's special account in order to speed up the capital withdrawal process.

a/ Withdrawal of capital to the special account:

To withdraw capital to the special account, the project management board shall send to the Ministry of Finance necessary documents, including an application and an official dispatch requesting the capital withdrawal. In case of capital withdrawal for supplementing the special account, a list of expenditures drawn up by the project management board, the settlement-related vouchers and invoices prescribed by the current regulations on budget management and a detailed list on the special account made by the concerned commercial bank must be added.

For common cases, the Ministry of Finance shall, basing itself on the concluded international agreements and the ratified capital withdrawal plan and within 5 working days, sign the capital withdrawal application and send it to the aid donor.

For projects with capital borrowed from the World Bank or the Asian Development Bank, the Ministry of Finance shall, within 5 working days, have to notify its opinions to the project management board and the servicing commercial bank. Basing itself on the written consent of the Ministry of Finance, and within 2 working days, the servicing bank shall have to sign the capital withdrawal application and send it to the aid donor(s).

After receiving a notice that money has already been transferred into the project's special account, the servicing bank shall immediately notify in writing the Ministry of Finance thereof for overseeing and budget cost-accounting.

b/ Use of special accounts:

- Regarding capital construction expenditures: Basing itself on the ratified plan and the completed project's volume, the project management board shall request the settlement by the servicing bank through the special account (as for the final payments of contracts or for contracts with lump-sum payment, an advance certification by the Department or General Department of Investment and Development is required). Each payment through the special account must comply with the ratio between foreign capital and domestic capital as prescribed in the relevant international agreements. Upon detecting that any payment fails to comply with the prescribed ratio, the Ministry of Finance shall suspend the subsequent capital withdrawals for such expenditures.

- For non-business administrative expenditures: Basing itself on the ratified annual budget estimate, the project management board shall, every quarter, send the Ministry of Finance a detailed quarterly budget estimate according to the current budget contents, which has already been ratified by the parent agency. Within 5 working days after fully receiving the dossiers, the Ministry of Finance shall consider and mandate the servicing bank to withdraw capital on the spending order of the project management board.

c/ Every month, the servicing bank shall have to send the Ministry of Finance a detailed list of spendings from the special account in order to complete procedures for budget revenue and expenditure recording. A report with detailed list on the special account drafted and submitted by the servicing bank to the Ministry of Finance shall serve as basis for the latter to account the budget capital allocation to the project (for projects entitled to budget allocations). An aid donor's notice on the transfer of capital to the special account shall serve as basis for the Ministry of Finance to account the budget and record debits for projects under the re-lending regime.

d/ The demand deposits' interests arising in the special accounts shall be dealt with as follows:

- With regard to projects eligible for State budget allocations, on the fifth day of every month the servicing commercial banks shall remit the deposits' interests arising in the special accounts into the State budget and send a written notice attached with a copy of the accreditative expenditure order to the Ministry of Finance (the Department for External Financial Relations) for budget accounting.

- With regard to projects under the re-lending regime (the time for debiting is the time when the capital is withdrawn from abroad), the interests arising in the special accounts shall be transferred to the accounts of the re-lent enterprises.

2.4. Capital reimbursement procedures:

According to the form of capital reimbursement, the investor shall make an advance payment (from the State budget sources or the investor's self-procured capital sources) to the beneficiary and then make a capital withdrawal application proposing the aid donor to reimburse capital.

To withdraw capital according to capital reimbursement procedures, the project management board shall have to gather documents, prepare capital withdrawal application and send them to the Ministry of Finance. Such documents shall include: a report on the pre-acceptance run and test, price notes for payment, vouchers and invoices proving that money has been paid to the contractor(s).

In common cases, the Ministry of Finance shall, within 5 working days and basing itself on the concluded international agreements and the ratified capital withdrawal plan, sign the capital withdrawal application and send it to the aid donor(s).

For projects with capital borrowed from the World Bank or the Asian Development Bank, the Ministry of Finance shall, within 5 working days, have to give its written opinions to the project management board and the servicing bank. Based on the written consent of the Ministry of Finance, the servicing bank shall, within 2 working days, sign the application for capital withdrawal and send it to the aid donor(s).

With regard to capital withdrawals to refund the expenditures from the State budget (or from budget-originating capital sources), the withdrawn sum of money must be remitted into the State budget.

With regard to capital withdrawals to refund the expenditures by project owners from their self-procured capital (mobilized capital or credit capital not originated from the State budget), such project owners shall be entitled to use the withdrawn sums of money in accordance with the current regulations on financial management.

2.5. Money order procedure:

Money order is a form of capital withdrawal applicable to the payment to a goods and/or service provider for parts of the contract with payment made in Vietnam dong. More concretely:

A goods and/or service providing contract shall be performed only after its payment conditions have been considered and approved by the Ministry of Finance.

When a payment demand arises, the project management board shall have to send the following documents to the Ministry of Finance:

- The invoices on the reception of equipment and goods and documents certifying the volume of work already completed. Particularly for case of initial advance payment, such documents are not required but there must be a bank guarantee and performance bond from the contractor's bank.

- An application for capital withdrawal made according to the prescribed form.

Within 7 working days, the Ministry of Finance shall consider, compare with the contract and the capital allocation or re-lending plan, certify those documents, then sign the capital withdrawal application and send it to the aid donor(s). After consideration, the aid donor(s) shall transfer through the banking system:

- Money in Vietnam dong to the contractor(s), if such project is entitled to State budget allocation;

- Money in foreign currency(ies), which has been withdrawn from the foreign party(ies) to the project management board, if the project is subject to re-lending regime. The project management board shall convert this sum of withdrawn foreign currency(ies) to Vietnam dong for payment to the contractor(s).

2.6. Dealing with exchange rate difference:

In cases where a contract prescribes that payment shall be made in Vietnam dong, an exchange rate difference may arise, which shall be dealt with as follows:

a/ For projects eligible for State budget allocations, the exchange rate difference shall be accounted into the budget.

b/ For projects subject to re-lending regime, the exchange rate difference shall be borne by investors.

C. MANAGEMENT, REPORTING ON AND INSPECTION OF CAPITAL WITHDRAWAL BY ODA-FUNDED PROGRAMS AND PROJECTS

Every quarter, the servicing commercial banks shall report the situation of capital withdrawal for settlement of each project to the Ministry of Finance (the Department for External Financial Relations) and the State Bank (the Department for International Relations). Before or on the fifth working day of every month, the servicing banks shall send reports on the development of the projects' special accounts in the previous month to the Ministry of Finance (the Department for External Financial Relations and the General Department for Investment and Development) and the project management boards. The Ministry of Finance shall sum up the situation of ODA capital withdrawal, settlement and debt payment, then notify the concerned agencies thereof and report it to the Prime Minister. The State Bank shall have to make quarterly and annual wrap-up reports for coordination with the Ministry of Finance in inspecting and overseeing the actual situation of capital withdrawal and settlement... through the system of accounts opened at those banks that serve ODA-funded programs and projects.

Investors of ODA-funded programs and projects shall have to make annual accounting reports on disbursed investment capital and final settlement statement on investment capital of projects (completed constructions or items of constructions). The accounting reports and final settlement statement must be made in compliance with the current provisions of the Ministry of Finance.

Annually, the ODA-funded programs and projects must be audited by an independent audit company approved by the Ministry of Finance. The audit shall focus on: the legality of investment in the project, the annually disbursed investment capital (including expenditures on completed capital construction, the procurement of goods and services, other expenditures, and expenditures which have not been included in the project's value), the value of the transferred property, the debt situation, the redundant equipment and supplies, and the special accounts. In special cases, the Ministry of Finance shall prescribe other necessary contents. The audit plan, the decision to choose an audit company and the audit contract must comply with the aid donor(s)' requirements and ratified by the Ministry of Finance. An auditing report must be sent to the Ministry of Finance within 15 days after the completion of the audit (for WB- and ADB-funded projects, the auditing report must be sent also to the State Bank (the Department for International Relations)).

The Ministry of Finance shall conduct periodical or extraordinary financial inspection and examination of ODA-using organizations and units, especially the use of special accounts.

III. IMPLEMENTATION PROVISIONS

This Circular takes effect 15 days after its signing and is a general guidance for all ODA-funded programs and projects. For particular programs and/or projects, the Ministry of Finance and the State Bank of Vietnam shall provide special guidances.

The earlier regulations which are contrary to this joint Circular shall cease to be effective.

In the course of implementation of this Circular, the concerned units are requested to promptly report any arising problems to the Ministry of Finance and the State Bank of Vietnam for study, amendment and supplement.