Circular No. 04-LB/NH/TC guides the implementation of the Prime Minister's Directive No. 219-TTg dated June 14, 1975 regarding the settlement of overdue debts in state-owned economic organizations, government agencies, and military units.

JOINT CIRCULAR

Guidelines for implementing the Prime Minister's Directive No. 219-TTg dated June 14, 1975 on the settlement of overdue debts in state-owned economic organizations, government agencies, and military units

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On June 14, 1975, the Prime Minister issued Directive No. 219-TTg on organizing the settlement of overdue debts in state-owned economic organizations, government agencies, and military units. To strictly comply with the above directive of the Government, heads of ministries, general departments, administrative committees at all levels, and grassroots units need to review and effectively implement state documents on debt settlement and asset liquidation and disposal that have been issued: Decision No. 127-CP dated August 5, 1968, No. 107-CP dated May 7, 1974 of the Council of Ministers, Directive No. 50-TTg dated June 15, 1968 of the Prime Minister, Circular No. 16-TC/NH dated May 8, 1971 of the Ministry of Finance and State Bank, Circular No. 27-TT/LB dated December 10, 1964 of the Ministry of Finance, State Bank, and Internal Trade, etc...

This joint circular provides guidance on specific points regarding the organization of overdue debt settlement and measures to prevent the recurrence of overdue debts in state-owned economic organizations, government agencies, and military units.

I. REQUIREMENTS FOR SETTLING OVERDUE DEBTS

1. Promptly resolve overdue debts from before until the end of 1974, contributing to bringing payment operations in the national economy back to normal, stabilizing economic and financial activities of grassroots units, enhancing and consolidating accounting systems, and promoting the supervisory role of the financial-credit system.

2. Closely combine the settlement of overdue debts with the handling and processing of lost, stagnant, substandard, and deteriorated materials and assets, aiming to mobilize materials and goods for use and create favorable conditions for resolving funds to settle overdue debts.

3. Implement measures to improve management organization and increase responsibility in adhering to regulations and procedures to prevent the recurrence of overdue debts.

II. SPECIFIC PROVISIONS ON THE ORGANIZATION OF SETTLING OVERDUE DEBTS

1. Organization of reconciliation and settlement of overdue debts.

a) Economic sectors, economic organizations, government agencies, and military units must review and thoroughly understand the situation of debts (including receivables and payables), the process and causes of debts, and propose solutions for each item. In cases where the organization of debt settlement is incomplete, inaccurate, or lacks legal documentation, grassroots units must re-examine, trace documentation to accurately record, and establish a legal basis for debt resolution.

Debts with sufficient legal grounds for demanding or paying money should be immediately processed through banks according to current payment regulations.

Creditors must actively reconcile debts that need to be reconciled with debtors and jointly confirm the debts; debtors must positively reconcile and confirm, not delaying or refusing to reconcile.

b) For debts that can be demanded with valid documentation, which have been confirmed by debtors but not yet paid, creditors may apply for collection of goods and services related to overdue debts according to Directive No. 17-CT/NH dated October 28, 1974 of the State Bank.

c) For debts that can be demanded with valid documentation, within a maximum period of 30 days from the date of receiving the creditor's request for reconciliation sent through the bank serving the debtor, if the debtor refuses to reconcile and confirm, the creditor may issue a collection notice along with necessary documentation to the bank serving them to demand payment. Within a maximum period of 30 days from the date the bank forwards the collection notice, the debtor must reconcile and confirm the debt and resolve the payment funds. If the debtor does not pay or provide a legitimate reason to refuse payment within this period, the bank will deduct the amount from the debtor's deposit account and transfer it to the creditor according to the collection notice mentioned in point b. If disputes arise afterward, both parties must resolve them themselves or submit dispute reports to responsible authorities.

d) For debts that can be demanded, after reconciliation, if the debtor does not acknowledge or disputes the debt, they must sign a memorandum detailing the reasons for non-acceptance of the entire or part of the debt; parts already acknowledged must be settled.

In case of disputes, the creditor must report to the superior managing authority for resolution; if both parties belong to the same sector, they should report to the debt settlement committee of the State Bank and Finance Department (located at the branch of the State Bank in the province or city); if both parties are under central management, they should report to the inter-ministerial debt settlement committee of the State Bank and Finance Department (located at the central State Bank); if one party is centrally managed and the other is locally managed, or both parties are locally managed but in different provinces or cities, and disputes cannot be resolved by the managing authorities, they should report to the inter-ministerial debt settlement committee of the State Bank and Finance Department. The inter-ministerial debt settlement committee of the State Bank and Finance Department must report to the Government for consideration and decision on unresolved disputes.

Both creditors and debtors directly file dispute cases with the Economic Arbitration Board for resolution due to non-compliance with economic contracts.

Decisions made by the head of the superior managing authority, records of resolutions by the State Bank and Finance Department debt settlement board, and decisions by various levels of economic arbitration boards have legal validity for settlement purposes. After the deadline specified in the resolution decisions and records, if the debtor has not repaid the creditor, the State Bank will deduct the amount from the debtor's deposit account or allocated funds and transfer it to the creditor.

e) For debts that have lost supporting documents, ledgers no longer have grounds to confirm the debtor unit, debts where the debtor has died, debts without an address for collection, or cases where the debt cannot be recovered, the creditor unit must establish a specific file for each debt, convene a committee to handle it or report to the superior administrative body, financial authority, and the Government's Asset Liquidation Board to resolve according to the responsibilities and authorities prescribed by the State for these bodies.

g) For debts owed by debtor units that have been dissolved, dispersed, or merged, the creditor unit must contact the direct superior administrative body of the debtor unit or the entity receiving the assets of such unit to request verification and payment. The direct administrative bodies or entities receiving the assets of dissolved, dispersed, or merged units must bear responsibility on behalf of the debtor unit to verify and confirm the accounts receivable and make payments as stipulated in point b; if there is no longer a superior administrative body or no entity receiving the assets, it shall be handled as in point e.

h) For debts that have valid invoices or have been verified and confirmed by both creditor and debtor parties, the debtor unit must immediately pay the creditor unit. For debts payable to creditor units within the state budget allocation for previous years and debts determined to have no recipient or basis for repayment, the debtor unit shall not repay the creditor unit but must prepare a list to immediately submit to the state budget and simultaneously inform the creditor unit about the amount submitted to the state budget.

i) Advance receipts, prepayments, or excess payments made by buyers, including amounts of this type temporarily held in the "escrow" account at the Bank, all basic units must settle no later than November 30, 1975. Basic units that have advanced payments, prepayments, or excess payments to be reclaimed must issue collection notices based on debt confirmation documents; units receiving these amounts must repay the creditor unit through a payment authorization form. For debts payable to creditor units within the state budget allocation for previous years, the debtor unit shall handle them as specified in point h.

k) Basic units unable to settle debts due to war losses not yet resolved must urgently prepare a war damage record in accordance with Circular No. 150-TC/TDT dated September 5, 1968, issued by the Ministry of Finance.

In cases where a war loss asset record cannot be prepared, the basic unit must organize a review committee and prepare a record confirming the damaged assets to be submitted to the superior administrative body for review, confirmation, and recommendation to the Government's Asset Liquidation Board for liquidation.

In cases of asset losses caused by lax management up to now unresolved, the basic unit must bring it to a handling committee or prepare a detailed report to the superior administrative body for resolution depending on the nature of the matter.

l) Administrative bodies (Ministries, General Departments, Offices, Bureaus...) must organize the settlement of accounts receivable and payable between basic units within their respective sectors with the assistance of the State Bank. The amount to be settled is the difference in receivables and payables of economic units after offsetting.

m) For debts between individuals and units, a handling committee must be established to resolve them in accordance with current regulations.

2. Measures to resolve capital for settling long-standing debts.

To properly allocate capital and simultaneously settle long-standing debts, basic units must base their classification of receivables and payables on the asset summary at December 31, 1974, according to the nature of the capital source for resolution: debts that can be offset against each other; debts financed from own capital must be resolved; debts within the scope of state budget resolution must apply for state budget allocation; debts within the scope of construction investment capital must apply for construction bank allocation or loans; debts within the scope of central bank credit must apply for central bank loans to settle debts.

a) Debtor units must promptly pay off debts to creditor units first using own capital and allocated funds; if insufficient capital is available for payment, the debtor unit must request the superior administrative body to adjust capital, apply for financial authority allocation, or borrow from banks to settle the debts.

Any delay in payment will result in penalties according to the current payment system.

b) Basic units must promptly request the superior administrative body and financial authority to allocate capital and funds to settle long-standing debts according to the current allocation system, including: approved working capital quotas to cover losses, price differences, construction investment capital, and resolution of war losses and flood damage.

For long-standing debts payable by administrative and service units, defense, the state budget will provide funding after receiving a reviewed report confirmed by the Minister of the principal ministry and agreed upon by the Ministry of Finance.

For construction investment expenditures during wartime, in cases where enemy attacks have occurred multiple times and actual project volumes no longer exist, basic units must prepare a war damage report to submit to the superior administrative body and financial authority for resolution according to the current asset disposal system.

For construction investment expenditures outside the plan, using working capital or occupying capital to build construction projects, basic units must settle the construction volume, conduct a review of responsibility violations and financial discipline, prepare a report confirmed by the superior administrative body, and send it to the State Bank, Ministry of Finance, and Construction Bank simultaneously to request capital allocation to settle debts and replenish capital shortages.

The amounts that the financial agency must directly allocate or allocate through the Construction Bank to grassroots units for settling outstanding debts outside the budget plan for the planned year shall be financed by the Ministry of Finance using loans from the State Bank; the Ministry of Finance and the Central State Bank shall agree on the loan amount each month as part of the monthly plan based on the debt reconciliation documents provided by the Ministry of Finance. This loan amount will be recorded in a separate account at the State Bank (Accounting and Financial Department) and reported to the State Budget Fund Management Department for monitoring the accounting of usage (sub-item 05.733 "Funds deposited with the Ministry of Finance for allocation to settle outstanding debts"). Each time there is an allocation order from the Ministry of Finance, the State Bank (State Budget Fund Management Department) records the debit under sub-item 05.733. The amounts that provincial and municipal finance bureaus must allocate to settle outstanding debts must be promptly centralized to the Ministry of Finance (Local Budget Department) to request funds from the aforementioned account. The allocation amount for settling outstanding debts will be transferred directly by the State Bank to the creditor unit specified in the allocation order.

Specifically, the Construction Bank may use its existing capital to directly allocate and settle outstanding debts by transferring the allocated amount directly to the creditor unit and recording it in a separate account. Monthly, the Construction Bank bases on the actual allocation amount to process requests for state budget transfers from the "funds deposited with the Ministry of Finance for settlement of outstanding debts" account opened at the State Bank to repay the allocated amount for settling outstanding debts.

c) For outstanding debts related to equipment, materials, goods belonging to basic construction investment that have been allocated or not allocated to specific projects by the Construction Bank and lent to economic units for settlement, after allocation, the economic unit must repay the loan to the Construction Bank.

d) For outstanding debts related to circulating capital materials and goods, in addition to requesting loans from the State Bank according to current credit lending regulations to settle debts as usual, economic units can also request special credit approved by the Government to settle outstanding debts.

Special credit approved by the Government to settle outstanding debts only applies temporarily to economic units borrowing to resolve outstanding debts from before 1974 regarding materials and goods received, with invoices or confirmation of debt from both buyer and seller. The borrower must prepare a loan application and promissory note for each loan.

This type of loan must be recorded under sub-item 35 "Special credit approved by the Government to settle outstanding debts" (supplementing Article 41 of the State Bank Accounting Chart). The loan amount is the amount due for repayment. When granting the loan, the bank immediately transfers the amount to the beneficiary. The maximum term for this type of loan is 90 days. The interest rate for this loan is the same as the interest rate for payment loans stipulated in the State's interest rate table. The indicators for checking this type of loan are included in the credit plan.

Within the loan period, the borrower must actively seek sources to repay the debt. Upon maturity, if the borrower cannot repay the debt, the bank deducts from their deposit account to recover the debt; if the borrower's deposit account has insufficient funds, the bank transfers to sub-item 04.570 "Overdue debt on special credit approved by the Government to settle outstanding debts" (supplementing Article 47 of the State Bank Accounting Chart), applies overdue interest rates, and deducts from the deposit account to recover the debt when funds are available.

At the end of the prescribed payment period for each unit, the grassroots units under ministries, general departments, provincial and municipal bureaus must conduct settlements. At the end of the settlement period, the branches and points of the State Bank, Construction Bank, and provincial and municipal finance bureaus must report in detail the allocation and lending for settling outstanding debts, losses discovered during the settlement of outstanding debts, and uncollectible loans for settling debts to the Central State Bank, Central Construction Bank, and the Ministry of Finance for consolidation and submission.

III. PREVENTING THE REOCCURRENCE OF OUTSTANDING DEBTS

In addition to measures to settle outstanding debts, effective measures are needed to prevent the reoccurrence of outstanding debts. To achieve this, it is not enough to rely solely on settlement measures but fundamentally requires addressing the economic causes that generate them.

a) All sectors, levels, and grassroots units must improve and enhance enterprise management and enterprise financial work.

In enterprise management, attention should be paid to the following aspects: strictly implementing the establishment and execution of production, business, and sales plans; strictly adhering to economic contract regulations as stipulated in Decree No. 54-CP dated March 10, 1975 of the Council of Ministers; fully implementing responsibility systems in material and technical supply organization, in receiving, transporting, exporting, importing, weighing, measuring, inspecting, and testing quality of materials and goods. Any errors, discrepancies, losses, or damage to assets must be promptly addressed.

In enterprise financial work, strict adherence to state financial principles is required, with particular emphasis on accounting; ensuring optimal use of capital without shortages or loss; accelerating capital turnover; emphasizing the awareness of paying for purchases and promptly demanding payment for sales; closely monitoring and promptly settling newly generated debts; researching to determine reasonable debt limits for receivables and payables within a permissible settlement period for each grassroots unit, to calculate circulating capital quotas.

Must strictly enforce the state payment system, centralize all payment activities through banks. Strictly prohibit deferred purchase and sale transactions, advance payments for orders, and receipt of such funds in basic units (except where permitted by the Prime Minister). Upon detecting violations, the banking unit will impose a 1% penalty on both parties involved and remit the fine to the state budget, while the banking unit is responsible for managing all advance payments and pre-payments for orders and handling them as follows:

- Recovering loans if they are from bank capital;

- Depositing into the state budget if they are from other sources.

b) Financial agencies shall strengthen supervision over production and business operations of sectors and basic units through increased revenue collection and budgetary allocations, promptly reviewing comprehensive working capital quotas for supervisory agencies, and coordinating with supervisory agencies and the State Bank to promptly review working capital quotas for economic units within the comprehensive working capital limits set by the Government for each Ministry and General Department. Subsequently, organize and allocate sufficient working capital quotas for economic units as well as other amounts within the scope of budgetary allocations.

c) The State Bank needs to study improvements to the payment and credit systems under new conditions, closely integrating payment and credit activities with the movement of materials and goods in economic units, enhancing supervisory and managerial roles through payment and credit work for economic activities; guiding and disseminating principles and procedures for payments, strictly enforcing payment discipline, performing central payment functions well, and protecting legitimate rights of both buyers and sellers during the implementation of payment work.

IV. SOME POINTS TO BE NOTED IN THE ORGANIZATION AND IMPLEMENTATION OF GUIDANCE

Resolving long-standing debts and preventing their recurrence is the direct responsibility of enterprises, economic organizations, state agencies, and military units, with the heads and chief accountants of these units bearing primary responsibility.

In directing implementation, it is necessary to closely combine and urgently settle long-standing debts with asset liquidation. Special staff should be assigned, while fully utilizing existing management structures, absolutely not delegating responsibilities solely to special staff or accounting finance departments. If difficulties arise due to previous staff transferring to other agencies, unit heads must report to the Ministry or General Department for them to recall the staff according to Prime Minister's Directive No. 219-TTG dated June 14, 1975.

Heads of basic units are responsible and must use their authority to resolve long-standing debts between their units and related units, as well as internal debts. If encountering difficulties that cannot be resolved independently, the unit must immediately report and closely follow up with responsible agencies until resolution.

Heads of supervisory agencies need to have dedicated staff to guide, urge, inspect, and resolve difficulties for basic units, organizing dispute resolution and debt offsetting among basic units within the same sector.

Banking and financial agencies under the direction of provincial and municipal administrative committees must establish a committee to oversee debt settlement, actively guiding, assisting, urging, and inspecting debt settlement in sectors and basic units, organizing the resolution of economic unit debt disputes in local areas; assigning responsibility to credit and finance staff to directly assist basic units in settling long-standing debts in accordance with Prime Minister's Directive No. 219-TTG dated June 14, 1975 and this joint circular.

This circular applies to the settlement of long-standing debts in state-owned economic units, state agencies, military units, and between these units and collective economic units. The capital for settling long-standing debts of collective economic units is self-owned capital or regular credit borrowing, not special allocations or loans for debt settlement as for state-owned economic units. Difficulties in settling long-standing debts between collective economic units will be addressed separately.

The deadline for completing the settlement of long-standing debts in state-owned economic sectors, state agencies, and military units is December 31, 1975.

Monthly, Ministries, General Departments, provincial and municipal administrative committees, branches of the State Bank, and provincial and municipal financial bureaus must report on the progress of long-standing debt settlement in each Ministry, General Department, and local basic units, along with difficulties, obstacles, and specific recommendations to the inter-ministerial State Bank-Finance Debt Settlement Committee (located at the Central State Bank) for consideration and resolution, and to compile reports to the Prime Minister.

At the end of each quarter and final settlement period, basic units, Ministries, General Departments, and Bureaus must conduct interim reviews and summaries, rewarding units that comply well with the Government's directive and joint circular on long-standing debt settlement, and imposing disciplinary measures on units that comply inadequately.