Decree No. 07/2006/ND-CP on the financial regime of the State Bank of Vietnam

DECREE

ON THE FINANCIAL REGIME OF THE STATE BANK OF VIETNAM

THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;

WHEREAS, the Law on the State Bank of Vietnam dated December 12, 1997 and the Law Amending and Supplementing Certain Provisions of the Law on the State Bank of Vietnam dated June 17, 2003;

WHEREAS, the Law on the State Budget dated December 16, 2002;

Considering the proposal of the Minister of Finance

DECREE

PART I
GENERAL PROVISIONS

Article 1This Decree stipulates the financial regime applicable to the State Bank of Vietnam (hereinafter referred to as the State Bank).

This Decree does not apply to units enjoying state budget funds and independent economic accounting enterprises directly subordinate to the State Bank.

Article 2. The revenue and expenditure of the State Bank shall, in principle, be carried out in accordance with the provisions of the Law on the State Budget and the Law on the State Bank of Vietnam.

Article 3. The State Bank may use its revenues to cover its operational costs. After setting aside reserves in accordance with the provisions of the Law on the State Bank of Vietnam and the specific provisions of this Decree, the remaining surplus shall be remitted to the state budget.

Article 4. The State Bank is exempt from paying taxes on its business operations and banking services.

Article 5. The Governor of the State Bank is responsible before the Government for preparing plans for revenue and expenditure and organizing the implementation of the financial regime of the State Bank.

Article 6. The Ministry of Finance performs the function of state management over finance and is responsible for inspecting and supervising the revenue and expenditure activities of the State Bank.

Chapter II
CAPITAL AND FUNDS

Article 7. The State Bank manages and uses the following types of capital:

1. Statutory capital.

2. Money issued into circulation to implement national monetary policy.

3. Deposits from credit organizations and the National Treasury.

4. Borrowed capital.

5. Other capital.

Article 8. The State Bank establishes and uses funds to implement national monetary policy and risk reserve funds for its business operations.

Article 9. The level of statutory capital of the State Bank is five trillion (5,000 billion) Vietnamese dong. Any change in this statutory capital level shall be decided by the Prime Minister based on the proposal of the Governor of the State Bank and the Minister of Finance.

The statutory capital of the State Bank is formed from the following sources:

1. Existing capital sources: state budget capital already allocated and investment capital for construction and acquisition of fixed assets.

2. Additional capital sources:

a) State budget capital (if any).

b) An amount equivalent to 12% of the average annual value of fixed assets, as provided for in Clause 7, Article 14 of this Decree.

c) Surplus arising from revaluation of fixed assets in accordance with the law.

d) Other capital sources (if any).

Article 10. The State Bank shall allocate 10% of the annual revenue-expenditure surplus, as provided for in Article 17 of this Decree, to supplement the fund for implementing national monetary policy.

The State Bank shall take the lead and coordinate with the Ministry of Finance to issue regulations on the management and use of the fund for implementing national monetary policy.

Article 11. The State Bank is entitled to establish a risk reserve fund and record it as an expense equal to 10% of total revenue minus expenses that do not include the risk reserve fund (excluding revenue and expenses from state budget funds)..This risk reserve fund is to be used to offset losses or deemed losses from credit activities, payment services, and bank funds due to objective reasons; the difference in losses after collective or individual compensation in accordance with the law. In cases where the risk reserve fund is insufficient to cover such losses, the State Bank and the Ministry of Finance shall submit to the Prime Minister measures to address the shortfall.

The State Bank shall take the lead and coordinate with the Ministry of Finance to issue regulations on the management and use of the risk reserve fund.

Article 12. The State Bank shall carry out depreciation of fixed assets in accordance with the regulations of the Ministry of Finance..

The State Bank shall invest in basic construction and purchase fixed assets from the following sources: state budget funds; retained depreciation of fixed assets in accordance with the regulations; an amount equivalent to 12% of the average annual value of fixed assets and other lawful sources.

The management and use of capital for investment, construction, purchase of fixed assets, transfer, liquidation, inventory, and revaluation of assets of the State Bank shall be carried out in accordance with the law.

The State Bank has the responsibility to manage strictly, use reasonably, for the intended purpose, and safely all types of capital, funds, and assets; it shall not contribute capital or purchase shares of credit organizations or enterprises.

Chapter III
REVENUE AND EXPENDITURE

Article 13. The State Bank has the following revenue items:

1. Revenue from deposit, credit, and investment activities, including: interest income from loans, interest income from deposits, revenue from securities investments, and other revenue from credit activities.

2. Revenue from open market operations.

3. Revenue from foreign exchange transactions (foreign currency and gold).

4. Revenue from payment services, information, and bank funds.

5. Fees and charges as prescribed by law.

6. Other revenue.

Article 14. The State Bank has the following expenditure items:

1. Expenditure on business and banking services:

a) Interest payments on deposits and loans; expenditure on foreign exchange transactions; expenditure on open market operations;

b) Costs for printing, minting, storage, transportation, delivery, issuance, recall, replacement, and destruction of money; expenditure on payment and information services.

2. Expenditure for personnel of the State Bank, including civil servants, contractual employees, bonuses, and welfare benefits:

a) Salary and allowances according to the system; supplementary income for civil servants and employees of the State Bank under the quota mechanism; lunch expenses; transaction attire expenses; labor protection equipment expenses;

b) Regular and extraordinary bonuses and welfare benefits for civil servants and employees of the State Bank; the annual expenditure for these two items shall be equal to the total wage fund implemented in the year;

c) Bonuses for outstanding contributions to the activities of the State Bank; the maximum expenditure for this item shall be one month's salary implemented in the year.

3. Contributions according to wages (union fees, social insurance, health insurance, and other contributions according to the prescribed system), expenditure for mass organization activities.

4. Allowances for hardship and termination benefits as prescribed by law.

5. Expenditures for management and public service activities including: office supplies expenses; postal and telecommunications fees; electricity, water, health, and sanitation expenses for the agency; fuel expenses; travel expenses; reception, ceremonial, and conference expenses; expenses for inspecting and auditing the operations of the State Bank; training, professional education, scientific research, technological innovation expenses; expenses for literature, books, magazines, libraries, propaganda, advertising, and other management and public service activities.

6. Expenses for assets:

a) Depreciation of fixed assets;

b) Maintenance and repair expenses for assets; purchase expenses for tools; rental expenses for assets.

7. Allocate 12% of the average value of fixed assets annually to invest in developing technical expertise and banking technology.

8. Expenditures from state budget funds according to the prescribed regulations.

9. Establish risk reserve funds as stipulated in Article 11 of this Decree.

10. Other expenditures as prescribed by law.

Article 15. Implement a budget allocation mechanism for the State Bank to encourage cost savings, increase revenue, and be consistent with the specific characteristics of the State Bank's operations based on the following principles:

1. Determine the budget allocation amount for the State Bank's expenditures, excluding those specified in Clause 1, Point c Clause 2, Point a Clause 6, Clause 7, Clause 8, and Clause 9 of Article 14 of this Decree.

2. Deduct a portion of the State Bank's revenue-expenditure surplus to supplement the allocated budget.

3. The saved budget amount from implementing the allocation can be used to supplement income for State Bank staff and for other purposes as directed by the Ministry of Finance.

The Ministry of Finance will guide the budget allocation mechanism and determine specific allocation amounts for the State Bank during each period.

Article 16. The State Bank is responsible for fully, accurately, and promptly accounting for all revenues and expenditures in accordance with the laws on accounting and statistics. Revenues and expenditures of the State Bank are recorded under the accrual accounting principle. Foreign currency and gold transactions must be converted into Vietnamese Dong at the exchange rate set by the State Bank at the time of transaction occurrence.

Article 17. The annual revenue-expenditure surplus of the State Bank, after deducting the allocated budget surplus, shall be used as follows:

1. Allocate 10% to establish a fund for implementing national monetary policy.

2. The remainder is submitted to the state budget.

The submission to the state budget is carried out quarterly through provisional payments; the provisional payment amount equals 70% of the actual revenue-expenditure surplus of the quarter, with the remaining 30% to be paid into the state budget after the annual financial settlement report has been approved by the Governor of the State Bank.

Chapter IV
FINANCIAL INCOME AND EXPENSES PLANS AND REPORTS

Article 18. The fiscal year of the State Bank begins on January 1 and ends on December 31 of each calendar year.

Article 19. The annual financial income and expense plan of the State Bank is prepared and sent to the Ministry of Finance for review and consolidation into the state budget estimate as prescribed by the State Budget Law.

The State Bank implements accounting records and documentation systems in accordance with the laws on accounting and statistics.

Article 20. The annual financial settlement report is prepared according to the guidelines of the Ministry of Finance, approved by the Governor of the State Bank, and submitted to the Ministry of Finance no later than February 15 each year.

The audit and verification of the State Bank's annual financial settlement report are conducted by the National Audit Office. The audit results are reported to the National Assembly, the Prime Minister, and communicated to the Ministry of Finance.

Chapter V
IMPLEMENTATION

Article 21. The Ministry of Finance will coordinate with the State Bank to provide guidance on the implementation of this Decree.

Article 22. This Decree takes effect 15 days after its publication in the Official Gazette. The financial regulations stipulated in this Decree will be implemented starting January 1, 2006. This Decree replaces Government Decree No. 100/1998/NĐ-CP dated December 10, 1998.

Article 23. The Governor of the State Bank, the Minister of Finance, the Ministers, Heads of Ministries equivalent to ministries, Heads of government agencies, Chairmen of provincial People's Committees directly under the central government are responsible for enforcing this Decree./.