Thông tư 193/2011/TT-BTC

CIRCULAR

GUIDING FINANCIAL MANAGEMENT AND CAPITAL DISBURSEMENT FOR PROGRAMS AND PROJECTS FUNDED BY THE OPEC FUND FOR INTERNATIONAL DEVELOPMENT (OFID)

Pursuant to December 16, 2002 Law No. 01/2002/QH11 on the State Budget and June 17, 2009 Law No. 29/2009/QH12 on Public Debt Management;

Pursuant to the Government's Decree No. 79/2010/ND-CP of July 14, 2010, on public-debt management operations:

Pursuant to the Government's Decree No. 78/2010/ND-CP of July 14, 2010, on on-lending of the Government's foreign loans;

Pursuant to the Government's Decree No. 60/2003/ND-CP of June 6, 2003, detailing and guiding the implementation of the Law on the Stale Budget;

Pursuant to the Government's Decree No. 118/2008/ND-CP of November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

The Ministry of Finance guides financial management and capital disbursement for programs and projects funded by the OPEC Fund for International Development (OF1D) as follows:

Part I GENERAL PROVISIONS

Article 1. Scope of regulation and subjects of application

1. Scope of regulation

This Circular provides for financial management, capital withdrawal for payment, inspection, reporting, finalization and accounting of state budget applicable to OF1D-funded programs and projects.

2. Subjects of application

This Circular applies to agencies, organizations and individuals involved in the management and implementation of programs and projects funded with the Government's OFID loans.

Article 2. Interpretation of terms

1. The OPEC Fund for International Development (OFID) is the agency providing its development assistance capital.

2. Loan agreement is a capital borrowing agreement signed between the Socialist Republic of Vietnam and the OFID to finance development investment projects and programs in Vietnam.

Article 3. General principles

1. OFID loans for projects are foreign loans of the Government, which shall be managed under the Law on Public Debt Management, the Law on the State Budget and guiding documents, regulations on official development assistance (ODA) management, and this Circular.

2. Projects eligible for OFID loans allocated from the state budget are investment projects in public infrastructure or social welfare and those in other sectors which are incapable of directly retrieving capital and are funded with the state budget under the current Law on the State Budget, including the cases in which the local budget receives foreign loans on-lent from the central budget for allocation for projects from the ODA capital source under the mechanism on state budget capital allocation.

Domestically contributed capital for projects eligible OFID loans allocated from the state budget shall be allocated by the state budget (central or local budget) and included in annual state budget estimates as capital construction funds or administrative and non-business funds depending on projects' spending items.

3. Projects eligible for wholly or partly on-lent OFID loans are projects capable of retrieving the whole or part of capital, including also credit projects to which the mechanism on whole or partial on-lending will apply, and projects to receive part of ODA capital depending on their capital retrieval capacity.

Conditions on ODA capital on-lending (whole or partial on-lending, recipients of on-lent capital, currency used in on-lending, on-lending value, on-lending term, on-lending interest rate, charges applied by donors, charge for domestic on-lending, etc) shall be determined in the process of project preparation, appraisal and approval under Decree No. 78/ 2010/ND-CP of July 14, 2010. on on-lending of the Government's foreign loans, and/or agreements with donors.

4. Domestically contributed capital

a/ Domestically contributed capital is the capital amount contributed by the Vietnamese party to an OFID-funded project to cover the project's spending items, including also capital to pay taxes, capital withdrawal charge, banking charges, insurance premiums, freight, storage charge, audit expense and other lawful expenses if such charges and expenses are not covered by foreign loans under the Loan Agreement.

b/ Domestically contributed capital for projects eligible for allocation from the state budget of a certain level shall be allocated from the state budget of such level; domestically contributed capital for projects using wholly or partly on-lent capital shall be assured by project owners. Project owners shall arrange or propose a competent authority to arrange sufficient domestic capital for projects so as to ensure efficiency and conformity with the schedule of foreign capital disbursement.

5. Project management agencies and project owners shall take responsibility before law for their project implementation as committed in the Loan Agreement and shall manage the proper and effective use of loans according to the Loan Agreement and domestic regulations on management of construction investment projects. ODA management and use, and management of project assets, and make finalization upon project completion under current regulations.

Article 4. Service banks and project accounts

1. Service bank is a commercial bank selected by the Ministry of Finance itself or in collaboration with the project owner from the list of qualified commercial banks and authorized to conduct foreign-relation and payment transactions and provide banking services.

2. Responsibilities of a service bank

a/ At the request of the Ministry of Finance, to open an advance account for the project for receiving money disbursed by the OFID and transferring money from this account to the project's account opened at the slate treasury under current regulations.

b/ To guide and provide the Ministry of Finance and the project management unit with sufficient information for conducting domestic and overseas payment transactions via the banking system.

c/ To record the amount disbursed by the donor as credit entry in the project's advance account within 2 working days after receiving a credit note from the OFID and notify the received amount lo the Ministry of Finance and the project owner.

d/ Within 2 working days after transferring money as ordered by the account owner, to send to the account owner debit note documents related to the paid amount with such details as foreign currency amount, Vietnam dong amount, exchange rate, date of payment and payee for stale budget accounting.

e/ The advance account balance enjoys interest at the interest rate set by the service bank or agreed between the service bank and account owner. The service bank shall open an account for separately monitoring such interest on the advance account. The monitoring account balance also enjoys interest.

f/ Project service banks are entitled to collect service charges at their current rates.

g/ Monthly or upon request, to send lo the account owner statements on the advance account, interest on the project's advance account, service charges collected by the service bank, interest-charge difference, opening balance and closing balance.

3. Project accounts

a/ Service bank accounts

- Based on the projects' payment needs and at the request of the project management agencies for opening advance accounts for their projects, the Ministry of Finance shall send letters requesting the OFID to approve the use of advance accounts for projects. The OFID shall consider and send notices of approval or disapproval of the opening of advance accounts for the projects.

- Based on the OFlD's approval, the Ministry of Finance shall open advance accounts at service banks to meet the projects' payment requirements in accordance with the Loan Agreement, agreements with donors and Vietnamese current regulations. Advance accounts are intermediary accounts used for transferring money to capital source accounts opened by project management units at provincial-level stale treasuries.

b/ State treasury accounts

- Capital source accounts for receiving OFID loans: Depending on project implementation requirements and written agreements with donors, project owners shall open capital source accounts for their projects at state treasuries to receive OFID loans transferred from the projects" advance accounts, and pay for projects after receiving spending control notes from state treasuries. According to project designs, lower-level (district or commune) project management units may open deposit accounts at district-level state treasuries to receive capital from provincial-level project management units to pay for project activities.

- Accounts for payment of domestically contributed capital: Project owners shall open state treasury accounts to receive and pay domestic capital allocated by the state budget under current regulations.

4. Banking service charges

Banking service charges shall be paid with interests on advance accounts and accounted as total expenses of projects. Interests on the accounts of projects eligible for state budget allocations are state budget revenues. For mixed projects composed of both a component funded with state budget allocations and a component with ODA capital on-lent from the state budget which share the same advance account (the time the loan is on-lent from the state budget is the time the capital amount is withdrawn from the advance account), interests on the accounts constitute state budget revenues. Upon project completion, unused interests shall be remitted into the state budget. In case interests arc insufficient for paying banking service charges, owners of projects funded with state budget allocations shall draw up plans to request domestically contributed capital for payment. Owners of projects funded with on-lent loans shall pay banking service charges with their own capital sources.

5. Exchange rate

OFID loans in foreign currency shall be converted into Vietnam dong at account-transfer purchase exchange rates applied by service banks at the time of conducting transactions.

Part II SPECIFIC PROVISIONS

Article 5. Management and use of loans

1. OFID loans shall be used for investment items of projects at a rate specified in Annex 2 to the Loan Agreement signed with the OFID.

2. The financing rate specified in the Loan Agreement is a rate calculated on expenses for investment items, exclusive of taxes. This rate may be changed as agreed between the donor and borrower. A corresponding financing rate shall be applied to each time of loan withdrawal to pay for investment items so as to determine the withdrawn loan amount.

3. All loan withdrawals must be conducted before the closing date of the loan account (or the extended closing date of the loan account) in accordance with the Loan Agreement.

4. Loans may not be used to pay for goods items not indicated in the Loan Agreement.

5. Payment of foreign loans for projects complies with current stale regulations, the Loan Agreement, the Finance Ministry's documents guiding construction investment capital management and payment, regulations on ODA financial management, and this Circular.

Article 6. Methods of withdrawing foreign loans

Lawful expenses of projects shall be covered by OFID loans by direct payment, reimbursement/retroactive payment, or payment via advance account.

Capital withdrawal dossiers, procedures for spending control and payment of OFID loans and domestically contributed capital for OFID-funded projects comply with the Finance Ministry's Circular No. 108/2007/TT-BTC of September 7, 2007, guiding financial management for official development assistance-funded programs and projects; Circular No. 40/2011/TT-BTC of March 22, 2011, amending and supplementing a number of points of Circular No. 108/2007/IT-BTC; and Circular No. 107/2011/TT-BTC of July 20, 2011, amending Point c. Clause 2. Article 1 of Circular No. 40/2011/TT-BTC.

Project owners shall follow donors' guidelines on the method of and forms applicable in capital withdrawal in the OFID's capital disbursement instructions.

1. Direct payment

Direct payment is a form of payment in which the OFID will, at the borrower's request, transfer money directly to the contractor/goods or service provider.

When wishing to withdraw capital for direct payment, the project management unit shall send to the Ministry of Finance (the Department of Debt Management and External Finance) the following documents:

- An official letter requesting capital withdrawal, enclosed with the capital withdrawal application, statements made according to set forms, and necessary documents as required by the OFID;

- The contractor's/goods or service provider's invoice/payment request:

- A payment request (original) certified by the spending controlling agency.

Within 5 working days after receiving a complete and valid dossier, the Ministry of Finance (the Department of Debt Management and External Finance) shall consider and sign the capital withdrawal application to be sent to the OFID and shall, if approved by the OFID, transfer money directly to the contractor's/ goods or service provider's account.

2. Reimbursement/retroactive payment

Reimbursement is a form of payment in which the amount already paid by the project implementer with its own capital source for loan-covered lawful expenses shall be reimbursed.

Retroactive payment is a form of payment in which the OFID pays lawful expenses of a project arising before its effective date which have been paid by the borrower with its own capital source. Payment details and duration in which retroactive payment is allowed shall be specified in the Loan Agreement.

When wishing to withdraw capital for reimbursement, the project management unit shall send to the Ministry of Finance (the Department of Debt Management and External Finance) the following documents:

- An official letter requesting capital withdrawal, enclosed with the capital withdrawal application, statements made according to set forms, and necessary documents as required by the OFID. The capital withdrawal application must indicate the name and account number of the advancing unit.

- The contractor's/goods or service provider's invoice/payment request:

- A payment request (original) certified by the spending controlling agency.

- The project management unit shall supply additional documents evidencing that money has been transferred to the contractor.

- In special cases, the Ministry of Finance may require additional explanatory documents. Within 5 working days after receiving a complete and valid dossier, the Ministry of Finance (the Department of Debt Management and External Finance) shall consider and sign the capital withdrawal application to be sent to the OFID and shall, if approved by the OFID, transfer money for reimbursing the spent amount to the project management unit.

3. First withdrawal of capital to the advance account

The first withdrawal of capital to the advance account shall be conducted based on the advance account's limit approved by the OFID in a letter sent to the Ministry of Finance.

To withdraw capital, the project management unit shall send to the Ministry of Finance (the Department of Debt Management and External Finance) an official letter requesting capital withdrawal, capital withdrawal application and capital withdrawal statement, and the project's monthly or quarterly plan on capital use.

Within 5 working days after receiving a complete and valid dossier, the Ministry of Finance (the Department of Debt Management and External Finance) shall, based on the OFID's letter approving the use of the advance account, consider and sign the capital withdrawal application to be sent to the OFID.

4. Withdrawal of additional capital to the advance account

To withdraw additional capital to the advance account, the project management unit shall send to the Ministry of Finance (the Department of Debt Management and External Finance) the following documents:

- An official letter requesting withdrawal of additional capital to the advance account;

- A spending statement made by the project management unit according to the OFID's form, indicating each amount spent from the advance account with the following details: date of payment, amount in original currency, USD-equivalent amount. USD/VND exchange rate, payment details, payee, financing rate, and contractual value. This statement serves as a basis for the Ministry of Finance to carry out mutual ceasing procedures.

- A paper of request for investment capital payment, certified by the state treasury (the original and its English translation), investment capital withdrawal paper (the original and its English translation). Each certified paper of request for investment capital payment may be used only once.

- The signed contracts (in Vietnamese and their English translation) which shall be sent only once.

- Other documents as required by the donor (to be sent only once if multiple payments are made for one contract), including contract, bidding result-approving decision, invoice, performance guarantee, advance guarantee (in case of capital advance) or other documents as required by the donor.

- Dossiers and documents to be sent to the Ministry of Finance: In addition to the documents under the OFID's regulations, the project management unit shall make a statement (original) indicating each amount spent from the capital source account, certified by the state treasury at which transactions are made, and send it to the Ministry of Finance. Such statement must contain such details as date of payment, sum of money, payment details, payee, serial number/date of the spending slip.

Within 5 working days after receiving a complete and valid dossier, the Ministry of Finance (the Department of Debt Management and External Finance) shall consider and sign the capital withdrawal application to be sent to the donor for consideration and shall, when approved by the donor, transfer additional money into the advance account.

5. Withdrawal of capital from the advance account to the capital source account at the state treasury

The OFID"s loan will be withdrawn to each project's advance account opened at the service bank with the Ministry of Finance as the account owner. To withdraw capital from the advance account to the capital source account at the state treasury, the project management unit shall send to the Ministry of Finance (the Department of Debt Management and External Finance) the following documents:

- An official letter requesting withdrawal of capital to the capital source account, indicating the amount to be withdrawn, serial number of account, bank at which the account is opened.

- Spending estimate for the amount to be withdrawn. Annually, the project management unit shall work out and submit to the managing agency/provincial-level People's Committee for approval the project's annual financial plan (detailed by quarter, indicating the project's major activities, capital sources, expense items, financing rate from different capital sources for each expense item). The approved financial plan shall be sent to the Ministry of Finance as a basis for capital transfer in each tranche to the project management unit into its capital source account opened at the provincial-level stale treasury, and sent to the provincial-level Finance Department and managing agency for monitoring, management and accounting of foreign capital allocated to the province/city.

- Other documents when necessary.

Within 3 working days, after considering the project's needs for capital disbursement in the next tranche, surplus/deficient advanced amount and the project's advance account balance, the Ministry of Finance shall transfer money from the advance account to the project's capital source account, or notify the project management unit of the application of the method of direct payment when necessary.

6. Spending from the capital source account

Spending from the capital source account complies with the process of prior payment control. The process of prior payment control is a process according to which all amounts paid from the capital source account must be controlled by the slate treasury/on-lending agency before making payment under current regulations.

In case a project has accounts opened for the local level (district or commune), the provincial-level project management unit shall, based on the project design, Loan Agreement and current regulations, carry out procedures for advancing money for the district or commune level.

The capital source account's surplus (if any) in the last tranche of capital transfer for the project shall be reimbursed to the project's advance account for reimbursement to the foreign party.

Article 7. State budget accounting of OFID loans

1. The process of accounting slate budget capital complies with the Finance Ministry's Circular No. 107/2008/TT-BTC of November 18, 2008, additionally guiding a number of provisions on stale budget management and administration, the Finance Minister's Decision No. 19/2007/QD-BTC of March 27, 2007, promulgating the Regulation on accounting of state-budget mutual ceasing with regard to the Government's foreign loans and aid, and Decision No. 2752/QD-BTC of November 6, 2009, promulgating the Regulation on recording and accounting of the Government's foreign loans, aid and debts while operating the treasury and budget management information system (TABMIS).

2. Process of state budget accounting

a/ Payment via the advance account

For state budget-funded projects, based on the statement of the amount spent from the capital source account, the Ministry of Finance shall make a circular on mutual ceasing ofOFID loans already withdrawn and allocated for projects. OFID loans allocated for projects shall be accounted as foreign loan revenue and as target additional expenditure from the central budget for the provincial-level budget or as capital construction investment capital expenditure allocated for the managing agency.

For projects funded with on-lending OFID loans, based on documents on money transfer from the advance account to the capital source account, the Ministry of Finance shall make a circular on mutual ceasing of OFID loans already withdrawn and on-lent for the projects and send it to the on-lending agency for on-lending accounting for the projects.

Upon project completion, the surplus amount (if any) in the last tranche of capital transfer into the capital source account which is reimbursed to the project's advance account shall be accounted as revenue reduction/ expenditure reduction for the provincial-level and central budget.

b/ Direct payment/reimbursement

Based on the OFID's capital disbursement notice, the Ministry of Finance shall make a circular on mutual ceasing of OFID loans already withdrawn through direct payment/ reimbursement and already allocated/on-lent for projects. OFID loans allocated for projects shall be accounted as foreign loan revenue and as target additional expenditure from the central budget for the provincial-level budget or as foreign loan expenditure for the management agencies to implement the projects. OFID loans on-lent to the projects shall be accounted as foreign loan revenue and as on-lent loan expenditure for the projects.

Article 8. Finalization for projects

Finalization shall be made annually for OFID-funded projects under the Finance Ministry's Circular No. 2I0/2010/TT-BTC of December 20. 2010, stipulating finalization of state budget funds for capital construction according to every fiscal year, and for completed projects under the Finance Ministry's Circular No. 19/2011/TT-BTC of February 14. 2011. finalization of completed projects funded with state capital.

Article 9. Audit of financial statements

1. Audit of annual financial statements of OFID-funded projects aims to examine and certify the truthfulness and validity of project's financial statements in a fiscal year in terms of financial, asset and equipment management as committed between the OFID and Government, and to certify that the projects' resources have been properly used by project owners according to financial and accounting procedures, regulations, policies and regimes as agreed between the Government and the OFID in the OFID Loan Agreement for the projects.

2. Audit of annual financial statements of OFID-funded projects must meet the audit requirements of the OFID and comply with current domestic regulations. Annual financial audit reports shall be sent to the OFID and Ministry of Finance within 4 months after the end of a fiscal year.

3. In auditing annual financial statements of OFID-funded projects, audit companies, auditors and project owners shall comply with current regulations on audit as well as audit standards and auditor's professional ethics standards. Audit companies selected to audit OFID-funded projects must be those lawfully operating in Vietnam and be on the list of qualified audit companies publicized annually by the Ministry of Finance (or an occupational organization authorized by the Ministry of Finance).

4. Apart from audit of annual financial statements, audit may be hired for each completed work item, work or job under an OFID-funded project (which has special characteristics, large scale or requires large funds) when necessary.

Article 10. Reporting and supervision regulations

1. Quarterly, project management units shall send reports on project implementation progress and situation to the OFID.

2. Monthly, quarterly and annually, project management units shall send reports on the use of OFID loans in capital source accounts, co-financed capital and domestic capital to slate treasuries at which transactions are made for carrying out comparison and certification procedures and concurrently to the management agency, the Ministry of Finance and the Ministry of Planning and Investment as a basis for monitoring and supervision.

3. Finance agencies at all levels and project management agencies may independently conduct, or coordinate with relevant agencies in conducting, regular or extraordinary examination or inspection of OFID-funded projects with regard to contents related to financial management under this Circular.

Article 11. Organization of implementation

1. This Circular takes effect on February 12, 2012.

2. In case legal documents referred to in this Circular are amended, supplemented or replaced, the amended, supplemented or replacing documents will apply.

3. Any problems arising in the course of implementation should be promptly reported to the Ministry of Finance for guidance and coordinated settlement.