Nghị định 48/2017/ND-CP

DECREE

PRESCRIBING CERTAIN PARTICULAR FINANCIAL – BUDGET SYSTEMS AND POLICIES TAILORED FOR HO CHI MINH CITY

Pursuant to the Law on Government Organization dated June 19, 2015;

Pursuant to the Law on State Budget dated June 25, 2015;

Pursuant to the Law on Public Investment dated June 18, 2014;

Pursuant to the Law on Public Investment dated June 17, 2009;

Upon the request of the Minister of Finance;

The Government hereby introduces the Decree that prescribes certain particular financial – budget systems and policies tailored for Ho Chi Minh city.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of application

1. This Decree sets out specific regulations on implementation of the Law on State Budget concerning certain particular financial - budget systems and policies tailored for Ho Chi Minh city.

2. Other financial – budget systems and policies that are not covered under this Decree shall be subject to regulations laid down in the Law on State Budget and other Government’s Decrees prescribing specific instructions for implementation of the Law on State Budget.

Article 2. Subjects of application

1. State regulatory authorities, political organizations, socio-political organizations, socio-professional political organizations, social organizations, socio-professional organizations and public service providers that use Ho Chi Minh city’s locally-controlled state budget.

2. Other organizations or individuals involved in Ho Chi Minh city’s financial and budget activities.

Article 3. Sources of revenue and budget of expenditures of Ho Chi Minh city

1. The mandate for sources of revenue and budget of expenditures of Ho Chi Minh city shall be subject to the provisions of the Law on State Budget, the resolution passed by Ho Chi Minh city People’s Council in response to the petition from Ho Chi Minh city People’s Committee on the mandate for sources of revenue and budget of expenditures to specific budget authorities of subdivisions of Ho Chi Minh city (urban districts, suburban districts, wards, commune-level towns or communes) in accordance with the Law on State Budget; match practical conditions and demands for socio-economic development, national defence, security, social order and safety within Ho Chi Minh city.

2. Based on the government’s annual budget mandated by the Prime Minister and implemented under the guidance of the Ministry of Finance, Ho Chi Minh city People’s Committee shall petition Ho Chi Minh city People's Council to make its decision on the city’s budget of estimated revenues and expenditures; allocation of collecting and spending duties to the city’s specific budget subdivisions; supplementary amount of revenues and expenditures allocated from the city’s budget to its budget subdivisions provided that this matches the city’s socio-economic development requirements and conforms to the overall strategy for the state budget.

3. The distribution ratio (%) of revenues of the central budget to these of the city’s budget shall be subject to the resolution of the National Assembly. The distribution ratio (%) of revenues of the central budget to these of the city’s budget shall be fixed for a period of 05 years, coincide with the 5-year period of socio-economic development or otherwise subject to the National Assembly’s resolution.

Chapter II

MANAGEMENT OF HO CHI MINH CITY’S BUDGET

Article 4. Estimated expenditures of Ho Chi Minh city

Estimated expenditures of Ho Chi Minh city shall be calculated according to principles, criteria and norms for distribution of its budget of expenditures that have been decided by the National Assembly’s Standing Committee to be applied in the period of budget stabilization of local subdivisions.

Article 5. Budget deficit

1. The city’s budget may be overspent on condition that such overspending is used for investing in development of projects specified in the mid-term public investment plan decided by the People's Council as prescribed by Clause 5 Article 7 of the Law on State Budget.

2. The limit for the city’s budget deficit shall be subject to the National Assembly’s annual resolution. The amount of the city’s budget deficit shall be decided by the city’s People’s Council but shall not be allowed to exceed the limit for the budget deficit subject to the National Assembly’s annual resolution.

3. The city’s budget deficit shall be made up for by domestic borrowed funds derived from issuance of local government’s bonds, on-lending of funds by the Government to the city and other domestic loans stipulated by laws. The city shall not be allowed to directly take out any foreign loans to offset its budget deficit.

4. The outstanding balance of borrowed fund (including domestic borrowed funds derived from issuance of local government’s bonds, on-lending of funds by the Government to the city and other domestic loans stipulated by laws) as part of the city's budget shall not be allowed to exceed 70% of the amount of revenues in the local budget that is received according to the stated mandate. Local budget revenues shall be identified on the basis of the city’s proposed budget approved by the National Assembly in the budget year.  Where it is necessary to take out borrowed funds to execute important infrastructure projects but the outstanding balance of borrowed fund owed by the city's budget exceeds the limit stipulated by this Clause, Ho Chi Minh city People's Committee shall make a report on this to the Government that then proceeds to present it to the National Assembly’s Standing Committee for its review before filing a petition for the National Assembly’s decision.

Article 6. On-target bonus and supplementary amount relative to an increase in revenue of the central budget compared with the Prime Minister’s mandated budget

1. On an annual basis, where total revenue of the central budget increases in comparison to the National Assembly’s approved budget and revenues collected by the city as payment to the central budget increases in comparison to the city’s mandated budget, subject to regulations set out by the Law on State Budget, the Government shall petition the Standing Committee to consider approving on-target bonuses and supplementary amounts relative to the increased amount of revenues of the central budget in accordance with Clause 2 and 3 of this Article.

2. On an annual basis, where the realized amount of central budget revenues coming from revenues distributed between the central budget and the city's budget increases compared with the Prime Minister's mandated budget, the city's budget shall receive a bonus that is equal to 30% of this increased budget and does not exceed the amount of central budget revenues that increases compared with the previous budget year’s realized amount of revenues.

3. The city shall annually receive an on-target supplementary amount from the central budget that does not exceed 70% of the amount of central budget revenues increasing due to revenues distributed between the central budget and the city's budget in comparison with the Prime Minister’s mandated budget (the portion of revenue that remains after the portion of revenue is given as an on-target bonus as specified by Clause 2 of this Article), and of revenues wholly owned by the central budget as referred to in Point b, c, d, g, h, i, q Clause 1 Article 35 of the Law on State Budget that increase in comparison with the Prime Minister’s mandated budget (except for revenues that do not fall under the city’s authority, do not arise but are collected within Ho Chi Minh city; revenues authorized for used by a competent authority; amounts recorded as revenues or expenses in an accounting book and revenues retained for use by city-governed entities which are administered through the state budget in accordance with applicable laws). The on-target supplementary amount shall not be allowed to exceed the amount of central budget revenues that increases within the city in comparison with the previous budget year’s realized amount of revenues.

The on-target supplementary amount shall be calculated based on total revenue rather than separate revenues.

4. In reliance on the on-target bonus and supplementary amount coming from the increased amount of central budget revenues that are specified in the resolution of the National Assembly’s Standing Committee, Ho Chi Minh city People’s Committee shall make a report to Ho Chi Minh city People's Council to obtain its approval for use of such bonus and supplementary amount for implementation of infrastructure programs or projects, repayment of loan debts owed, fulfillment of important tasks and grant of bonuses to the city’s budget subdivisions. 

Article 7. Financial reserve fund

1. The city’s financial reserve fund is a state-controlled financial fund established under the provisions of Article 11 of the Law on State Budget.

2. The financial reserve fund shall be derived from the following sources:

a) Amounts set aside within the annual budget of expenditures;

b) Budget residue or surplus prescribed by Clause 1 Article 72 of the Law on State Budget;

c) Increased amounts of budget revenues prescribed by Clause 2 Article 59 of the Law on State Budget;

d) Interest on deposits into the financial reserve fund;

dd) Other financial sources prescribed by laws.

The amounts set aside for the financial fund as referred to in Point a, b and c of this Clause shall be subject to the resolution of Ho Chi Minh city People's Council after receipt of a report from Ho Chi Minh city People’s Council provided that these stipulated amounts match demands for financial reserve and suit the city's budget balancing capability in reality.   

3. Ho Chi Minh city People’s Committee shall be entitled to use an advance given by the city's reserve fund for investing in significant infrastructure projects that are defined in the city’s budget of expenditures but for which financing within the scope of the mid-term public investment proposal has not been arranged. The duration of that advance shall not exceed 36 months from the date of grant of such advance.

Chapter III

MOBILIZATION OF FINANCIAL SOURCES FOR INVESTMENT IN DEVELOPMENT OF HO CHI MINH CITY

Article 8. Domestic funds for developmental investment purposes

1. The Government prefers investing budget and other financial sources for socio-economic development purposes in order for the city to play its role as the regional and nationwide socio-economic center.

2. If certain important and large-scale investment projects or construction works in the environment, transportation or irrigation field that fall under the authority of Ho Chi Minh city exceed the city’s budget balancing capability, Ho Chi Minh city People's Committee shall file its budget proposal and petition to the Ministry of Planning and Investment and the Ministry of Finance that make a consolidated report to the Government to petition the National Assembly to approve central budget subsidies to the city’s budget for the purpose of implementation of these projects or construction works. 

3. In order to promote effective use of city-managed land supplies, Ho Chi Minh city People’s Committee shall be entitled to receive advances derived from the city's budget or borrowed funds as required by laws for infrastructure projects specified in the budget's investment plan in order to conduct a land use right auction. After completion of a land use right auction, it shall repay advanced or borrowed funds.

Article 9. Official Development Assistance (ODA) funds and concessional loans obtained from foreign sponsors

1. The Government shall prefer allocating ODA funds and concessional loans to Ho Chi Minh city for urban infrastructure, environment investment and construction projects or programs, and any program or project that is capable of recovering investment capital.

2. Allocation of investment funds for programs or projects financed by ODA funds and concessional loans within the city shall be carried out according to the following principles:

a) As for programs or projects falling within the scope of Ho Chi Minh city’s budget of expenditures, the Government shall allow the city to have access to its on-lent funds or partial allocations derived from such budget in accordance with applicable laws.    The city shall bear responsibility for arranging the counterpart fund from its budget to ensure it will use and repay principal debts and loan interest on on-lent funds in a due and timely manner in accordance with laws;

b) City-controlled enterprises shall be entitled to receive funds on-lent by the city to invest in programs or projects that are capable of recovering a part or whole of borrowed funds.  City-controlled enterprises shall be obliged to pay loan principal and interest by the stipulated due date.

3. The specified amount of ODA funds or concessional loans that the Government may allocate Ho Chi Minh city for implementation of its programs or projects shall be subject to Point a Clause 2 of this Article, based on the request of the city, opinions of the Ministry of Planning and Investment, and the Ministry of Finance, shall be balanced in the Government's annual proposed budget presented to the National Assembly for its approval in accordance with the Law on State Budget and the Law on Public Investment.

4. Ho Chi Minh city People's Committee shall be vested with the right to decide to receive non-refundable aids, regardless of the amount of such aids and shall be subject to the Prime Minister’s decision in order to receive aids used for religious, national defence and security purposes in particular. The Chairman of Ho Chi Minh city People’s Committee shall take charge of keeping, managing and using such aids in an effective manner, implementing bookkeeping and accounting regimes in accordance with laws, making a periodic report to the Ministry of Finance and the Ministry of Planning and Investment for their examination, supervision and preparation of another consolidated report to the Prime Minister.

Article 10. Principles of application for developmental investment loans

1. Ho Chi Minh city shall be allowed to take out domestic investment loans by means of issuance of local government’s bonds or in other capital mobilization form in accordance with applicable laws. In this case, Ho Chi Minh city is obliged to arrange its local budget for payment of loan principal and interest owed as well as other related costs that may arise.

2. Ho Chi Minh city shall be entitled to on-lent foreign borrowed funds for its infrastructure investment and development projects or programs specified in the city’s budget of expenditures according to the following processes: Ho Chi Minh city People's Committee draws up the loan proposal, collects opinions on such proposal from the Ministry of Finance, the Ministry of Planning and Investment, the State Bank of Vietnam, make a report to the Ministry of Finance and the Ministry of Planning and Investment that then jointly submit it to petition the Prime Minister to consider making his decision based on the Government's policy on on-lending the Government's borrowed funds to the city for implementation of programs or projects proposed by Ho Chi Minh city People's Committee. The city shall be responsible for arranging its budget for payment of loan principal and interest owed in accordance with applicable laws.

3. When wishing to take out loans for investment purposes, Ho Chi Minh city People's Committee shall draw up the plan to use these loans to make up for its local budget deficit and prepare the annual proposed budget for submission to the Ministry of Finance for preparation of a consolidated report sent to a competent authority for its verification and decision.

4. In order to get borrowed funds used for investing in the city’s programs or projects, the city must conform to the following requirements: these programs or projects must use borrowed funds in an effective manner in terms of socio-economic aspects; these programs or projects have been defined in the mid-term (5-year) public investment scheme approved by Ho Chi Minh city People's Council; construction or investment projects have been licensed by the investment decision issued by a competent authority; the city must arrange its local budget for full repayment of debts (including principal, interest and related costs) by the stipulated due date.

Article 11. Mobilization of non-state budget funds

1. In addition to funds mobilized for programs or projects that are financed by the state budget as referred to in Article 9 hereof, with respect to other projects having capital recovery capability or projects that are capable of recovering a part of investment capital, Ho Chi Minh city People's Committee shall make or petition a competent authority to make a legal decision on mobilization of investment capital in the following public-private partnership (PPP) forms as required by laws, e.g. BOT (build – operate – transfer), BTO (build – transfer – operate), BT (build – transfer), BOO (build – own – operate), BTL (build – transfer – lease), BLT (build – lease – transfer), O&M (operation and maintenance). 

2. Based on the local budget balancing capability, the city shall get involved in PPP projects by performing the following activities: Making capital contributions as support for execution of projects that serve business purposes or collect fees from users but from which revenues generated are not adequate to recover investment capital and gain profits; making payments to investors providing services under BTL or BLT agreements; providing assistance in developing and completing auxiliary projects, paying compensations, carrying out site clearance and residential resettlement activities.

Chapter IV

IMPLEMENTARY PROVISIONS

Article 12. Entry into force

1. This Decree shall enter into force from June 10, 2017 and apply for the budget year of 2017 onwards.

2. The Government’s Decree No. 124/2004/ND-CP dated May 18, 2004 on certain particular financial systems designed for Ho Chi Minh city and the Government’s Decree No. 61/2014/ND-CP dated June 19, 2014 on revision and supplementation of certain articles of the Decree No. 124/2004/ND-CP dated May 18, 2004 shall be repealed.

Article 13. Implementation responsibility

1. The Minister of Finance and Ho Chi Minh city People’s Committee shall undertake implementation of this Decree.

2. Ministers, Heads of Ministry-level agencies, Governmental bodies, centrally-affiliated authorities and Chairman of Ho Chi Minh city People’s Committee shall be responsible for enforcing this Decree./.