Circular No. 106-TC/ĐT guiding preferential credit loans from state budget funds

CIRCULAR

GUIDELINES FOR GRANTING LOANS OF FAVORABLE CREDIT FUNDED BY THE STATE BUDGET ISSUED BY THE MINISTRY OF FINANCE NUMBER 106-TC/ĐT ON DECEMBER 8, 1994

Pursuant to the Investment Management and Construction Regulation issued together with Decree No. 177/CP dated October 20, 1994 of the Government, the Ministry of Finance issues guidelines for granting loans of favorable credit funded by the State budget as follows:

I. GENERAL PROVISIONS

1\. Favorable credit funds from the State budget (hereinafter referred to as State credit funds) shall be used to grant loans to implement projects, objectives, and programs specified by the Government in the national plan, including:

- Projects for investment in economic infrastructure construction and production facilities capable of recovering capital.

- Key national investment projects during each period (electricity, cement, steel, water supply...).

- Certain other projects in sectors capable of recovering capital as recorded in the national plan.

The granting of favorable loans shall be specifically decided by the Government for each target group during each planning period.

2\. The General Department of Investment Development under the Ministry of Finance shall be responsible for managing and granting State credit funds to project sponsors according to the following methods:

2.1\. The Investment Development Bureau (Sub-bureau) shall directly grant loans.

2.2\. Entrust commercial banks selected to grant State credit funds to enterprises for re-lending on foreign loan projects.

3\. Interest rates for borrowing State credit funds shall be as prescribed by the Government. Commission fees for commercial banks or service fees shall be regulated by the Ministry of Finance.

4\. Organizations within the General Department of Investment Development system and banks entrusted to grant State credit funds (hereinafter referred to as lending agencies) shall be responsible for managing, directly granting loans, inspecting the use of borrowed funds, and collecting principal and interest repayments according to the Investment Management and Construction Regulation, Loan Agreements, and Entrustment Loan Agreements.

5\. Project sponsors shall be responsible for managing and using borrowed funds for their intended purposes effectively, repaying principal and interest according to the Loan Agreement signed with the lending agency; reporting and settling accounts for investment implementation and investment capital according to current regulations and submitting them to the lending agency.

II- SPECIFIC PROVISIONS

1\. Procedures for establishing, protecting, and approving plans for State credit funds.

1.1\. Annual Plan:

a\. Project sponsors shall prepare annual funding plans along with economic and technical justifications and total budgets of projects approved by competent authorities (for new projects) and submit them to their superior agencies for consolidation and presentation to the National Planning Committee and the Ministry of Finance for approval. The National Planning Committee shall consolidate and submit to the Prime Minister for approval.

After the annual plan is approved and announced by the National Planning Committee to relevant ministries and provincial people's committees, project sponsors shall register loan plans with the Ministry of Finance based on which they can sign credit agreements with lending agencies.

The annually approved State credit fund plan serves as the basis for the State budget to transfer funds to the General Department of Investment Development as the source of loans or to transfer funds to commercial banks entrusted to grant loans.

b\. Superior agencies of project sponsors shall approve annual investment plans for each project, send two copies to the General Department of Investment Development for transfer to lending agencies as the basis for management and granting loans according to the approved plan.

c\. In cases where there is a need to adjust funds during the approved annual plan period, project sponsors must explain the reasons (with comments from the lending agency) to the investment decision-making agency for consideration and resolution.

d\. For loans from foreign sources, project sponsors must prepare and submit to the General Department of Investment Development plans for withdrawing foreign loans consistent with requirements and conditions stipulated in the Credit Agreement.

1.2\. Quarterly Plan:

a\. Project sponsors shall base on the approved annual plan and the investment progress schedule for the quarter, prepare quarterly loan funding plans and submit them to their superior agencies and lending agencies.

The plan content includes the following indicators:

- Investment volume and loan amount already implemented from the beginning of the year to the end of the reported quarter, including foreign loan amounts withdrawn (if applicable).

- Investment volume and loan amount required to implement the quarterly plan, including foreign loan amounts to be withdrawn (if applicable).

- Loan repayment amount (principal and interest) for this quarter according to the Loan Agreement, including foreign loan repayment amounts (principal and interest) (if applicable).

b\. Lending agencies shall base on the plans of project sponsors to compile State credit fund plans within their management and lending responsibilities and submit them to the General Department of Investment Development.

c\. Based on the quarterly funding plan approved by the Ministry of Finance, the General Department of Investment Development shall notify the superior agencies of project sponsors to establish loan limits for each project and submit them to the General Department of Investment Development.

The quarterly loan limit is established in four copies, transferred to the General Department of Investment Development for joint signature. The General Department retains one copy, transfers one copy to the lending agency, and returns two copies to the superior agency of the project sponsor for retention and submission of one copy to the project sponsor.

2\. Transfer of State budget funds to the General Department of Investment Development.

2.1\. The Central Budget shall transfer funds to the General Department of Investment Development for lending or for the General Department of Investment Development to transfer funds to commercial banks entrusted to lend to project sponsors.

2.2\. The basis for transferring funds is: the quarterly State credit fund plan approved by the Ministry of Finance and the request for fund transfer from the General Department of Investment Development for the State Budget to process the transfer of NSSNN funds to the General Department of Investment Development.

2.3\. Methods of transferring funds:

- Domestic funds (VND): The State Budget shall transfer funds through a State Budget Disbursement Order issued to the General Department of Investment Development and deposited into an account opened at the Central Treasury.

- Foreign funds (loans, aid): Upon receipt of foreign funds, the State Budget shall record income and expenditures for investment in the State Budget and transfer funds to the General Department of Investment Development. In cases where commercial banks are selected and entrusted to directly receive foreign funds, they shall follow Circular No. 18-TC/TCĐN dated March 5, 1994 of the Ministry of Finance.

2.4\. The General Department of Investment Development system shall use allocated State budget funds to grant favorable loans:

- On the basis of the capital transferred by the State Treasury, the General Department of Investment Development allocates the lending capital to the lending agencies through the Capital Lending Limit Notice. The Notice must be made in four copies, with the General Department of Investment Development retaining one copy, sending one copy to the lending agency, one copy to the KBNN for retention, and transferring one copy to the KBNN of the province or city as the basis for payment of loans.

- The amount of capital already lent and the Kho bạc Nhà nước branch that has made payments to the lending agency shall report this to the General Department in accordance with separate guidelines.

3- Credit facility contracts under state budget capital.

3.1- Entrusted loan contract:

a) The General Department of Investment Development signs a Credit Facility Contract with the selected bank entrusted to lend State Credit capital.

b) The contract is signed for each project or a combination of projects funded by State Credit capital based on approved investment projects recorded in the State Plan.

For projects using foreign loans (in whole or in part), the terms of the entrusted loan contract must comply with the conditions and procedures for withdrawing funds and repaying debt (principal and interest) to foreign countries according to the Credit Agreement.

c) The contents of the entrusted loan contract include:

+ For the entrusting party: Responsibilities and methods for transferring capital so that the entrusted party has sufficient capital to lend according to the plan; Inspection of the use of borrowed capital and collection of debts.

+ For the entrusted party: Responsibilities for managing, lending, and inspecting the use of borrowed capital, collecting debts (principal and interest) from the project investor, submitting periodic reports on the implementation of investment, lending, and use of borrowed capital, and repaying the outstanding debt (principal and interest) of the projects to the entrusting party.

+ Interest rate for each project, commission fee enjoyed by the Bank, method of calculation, and method of payment.

3.2- State Credit Loan Contract:

a) The lending agency signs a State Credit Loan Contract with the project investor.

b) Conditions and grounds for signing the Contract:

+ The investor has opened an account at the lending agency.

+ The project has been decided to be invested with State Credit capital.

+ Notification of the annual credit plan has been approved.

c) The contents of the Contract include the following indicators:

+ Schedule for receiving loan capital and repayment time (principal and interest) of the project.

+ Annual schedule for receiving loan capital (for projects lasting more than one year) must be consistent with the progress of the project recorded in the annual State Plan.

+ Commitments of the investor borrowing from foreign sources must be consistent with the terms committed in the Credit Agreement.

4- Implementation of the Project Investor signing the State Credit Loan Contract.

4.1- The investor borrows capital from the lending agency where the investment capital is implemented.

4.2- The investor must submit the following documents to the lending agency (originals):

a) Preparation phase for investment:

+ Document of the competent authority approving the preparation for investment.

+ Approved investment preparation plan.

+ Document appointing the investor and decision appointing the chief accountant by the competent authority.

+ Document requesting the opening of an account and the preferential credit loan contract.

b) Preparation phase for implementing the project:

+ Approved project preparation plan.

+ Decision to invest with State Credit capital.

c) Implementation phase of the project:

+ Approved total project.

+ Decision allocating land and construction permit.

+ Contracts awarded by the investor with participating units and organizations in the implementation of the project.

Within five working days from the date of receipt of all documents, the lending agency must complete the account opening procedure and sign the State Credit Loan Contract with the investor.

In case it is found that the project is not effective or unable to recover the capital, the lending agency must report to the investment decision-making agency and the General Department of Investment Development for handling.

5- Implementation of State Credit Loan Capital.

5.1- Documents serving as the basis for lending State Credit capital to the investor include:

+ Signed State Credit Loan Contract.

+ Approved annual investment plan and quarterly loan limit notification.

5.2- The investor borrows capital for advance payment to the receiving contractors:

a) Borrowing capital for advance payment for consulting services.

b) Borrowing capital for advance payment for construction and installation: For tendered and bid projects.

+ The investor sends the following documents to the lending agency as the basis for borrowing capital for advance payment to the consulting service contractor and construction and installation contractor:

- Award contract.

- Loan request form.

- Authorization forms for each unit to be advanced.

+ Within five working days, the lending agency reviews the documents submitted by the investor, processes the loan, and pays the units entitled to advance payment.

c) Borrowing capital for advance payment for equipment for tendered and bid projects.

+ The investor sends the following documents to the lending agency as the basis for borrowing capital for advance payment to the supply, processing, transportation, and storage units:

- Award contract.

- Loan request form.

- Authorization forms for each unit to be advanced.

+ Within five working days, the lending agency reviews the loan documents submitted by the investor, processes the loan, and pays the units entitled to advance payment.

d) The investor recovers the advance payment from the receiving contractors:

+ Depending on the nature and content of each advance payment, recovery can be done in one lump sum or gradually deducted from the payment of completed work volume or tasks:

- Advance payment for survey, design, processing, transportation, storage, and equipment purchase: Recovered in one lump sum when the award contract is completed and paid.

- Advance payment for construction and installation, supervision consulting: recovered gradually each time the completed work volume is paid in the last months of the plan year.

5.3- The investor borrows capital to pay for completed investment volumes:

a) The investor may borrow capital to pay for the following works:

+ Completed construction and installation volume.

+ Completed equipment volume.

+ Other completed cost volumes including:

- Investment preparation costs.

- Investor's operational costs.

- Consulting costs.

- Costs related to compensation and resettlement, relocation of construction forces, etc.

The loan procedures are uniformly carried out in accordance with the Circular guiding the management and disbursement of investment capital issued by the Ministry of Finance.

5.4- Debt Repayment (Principal and Interest):

a) The investor is responsible for repaying the loan (principal and interest) in accordance with the commitments recorded in the signed State Credit Loan Contract.

When the investment project is completed (partially or entirely) and handed over for use, the investor begins to repay the principal and interest (excluding grace periods, if any).

Repayment of loans (principal and interest) shall be made once every quarter. The project sponsor must proactively prepare payment vouchers for the lending agency and may repay the loan ahead of schedule.

b) The project sponsor must pay interest during the borrowing period (excluding grace periods, if any). Interest is calculated from the first loan disbursement based on the number of days borrowed and the outstanding principal until each repayment date.

c) The amount collected from loan repayments (principal and interest) by the project sponsor within two working days shall be remitted to the General Department of Investment and Development through the authorized bank.

5.5- Handling violations:

a) After five days from the due date for repayment (principal and interest), if the project sponsor fails to repay, the lending agency shall transfer the overdue debt to calculate overdue debt at an interest rate equal to 1.5 times the interest rate for the loaned project and will only continue to provide loans after the project sponsor has fully settled the overdue debt.

b) If it is discovered that the project sponsor misuses the loaned funds for purposes other than intended, the Director General of the General Department of Investment and Development has the right to temporarily suspend further lending upon the request of the lending agency. The decision to suspend lending and recover the previously disbursed funds shall be made by the Minister of Finance upon the recommendation of the Director General of the General Department of Investment and Development.

6- Reporting and inspecting State Credit Funds.

6.1- The project sponsor shall regularly report on the implementation of investment volume plans completed and management and use of funds to their superior agencies and lending agencies according to current reporting and accounting systems.

6.2- The lending agency shall promptly report weekly, quarterly, and monthly on the receipt, management, lending, and collection of loan repayments (principal and interest).

6.3- The lending agency shall inspect the management and use of loaned funds by the project sponsor periodically or unexpectedly.

6.4- The General Department of Investment and Development shall inspect periodically or unexpectedly the management of funds and lending activities of lending agencies.

6.5- Units subject to inspection have the responsibility to provide documents and explain to the inspecting agency. Upon completion of the inspection, a record must be sent to the General Department of Investment and Development. The inspected unit must strictly implement the inspection conclusions.

6.6- Any violations discovered during inspections must be reviewed and resolved in writing by the competent authority in accordance with the provisions of the Investment Management and Construction Regulations and this Circular.

III- IMPLEMENTATION PROVISIONS

This Circular takes effect from the date of issuance. All previous regulations concerning preferential investment loans from state budget funds are hereby repealed.

During implementation, if there are any difficulties, relevant sectors and localities should promptly reflect them to the Ministry of Finance for study and resolution.

Ministry... Form 01/TDNN

Number:...KH/ĐT

PLAN FOR BORROWING STATE CREDIT FUNDS

Year 199...

Unit: Million dong

Date...month...year 199...

Head of the agency

(Signature and Seal)

Ministry, Province... Form 02/TDNN

PLAN FOR BORROWING STATE CREDIT FUNDS

Quarter ...year 199...

Unit: Million dong

Date...month...year 199...

Planning Agency

Ministry, Province...

(Signature, stamp)

Ministry, Province...Form 03/TDNN

No.:...

QUARTERLY LOAN LIMIT

MINISTRY, PROVINCE...AND THE GENERAL DEPARTMENT OF INVESTMENT AND DEVELOPMENT ANNOUNCE:

Quarterly loan limit .../199...

OF THE PROJECT ... LOANING AT THE GENERAL DEPARTMENT OF INVESTMENT AND DEVELOPMENT ...

Note:

1/ Cumulative outstanding loan balance up to the reporting quarter.

2/ Of which: Loans from the beginning of the year to the reporting quarter.

Day ...month ...year 19...

The General Department of Investment and Development approves the planning agency's limit

(Signature, stamp)

(Copy 1: planning agency; Copy 2: General Department of Investment and Development; Copy 3: Project Sponsor; Copy 4: Investment and Development Department).

MONTHLY LIMIT ON CENTRAL GOVERNMENT INVESTMENT FUNDS

THE GENERAL DEPARTMENT OF INVESTMENT AND DEVELOPMENT AND THE STATE TREASURY ANNOUNCE TO:

1. Investment and Development Department ...

2. State Treasury of province, city ...

MONTHLY LIMIT ON CENTRAL GOVERNMENT INVESTMENT FUNDS MONTH ... YEAR ...

Unit: Million dong

Central Treasury Department Day ...month ...year 19...

(Signature, Seal) General Department of Investment and Development

(Signature, stamp)

(Copy 1: General Department of Investment and Development; Copy 2: Central Treasury Department; Copy 3: Investment and Development Department; Copy 4: State Treasury of province, city).

Form 05/TDNN

SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness

CONTRACT

AUTHORIZATION TO LEND STATE CREDIT FUNDS

Number: .../TDNN

Based on the Investment and Construction Management Regulations issued together with Decree No. 177/CP dated October 20, 1994 of the Government.

Based on Circular No. /TĐNN dated month year 1994 of the Ministry of Finance guiding the provision of preferential credit loans from state budget funds.

Based on Decision No. /TCĐT dated month year 199 of the Ministry of Finance selecting Bank ... to be entrusted to lend State Credit Funds for the ... investment project.

Based on Investment Decision No. dated month year 199 of ... and the approved total estimate of the project dated month year 199 of ...

- The entrusting party is the General Department of Investment and Development, represented by:...position:....

- The receiving party is Bank ..., represented by:...position:....

Agreement to sign the authorization contract to lend State Credit Funds for the ... investment project with the following conditions:

Article I: - Based on the project documents that have been reviewed and meet the conditions for borrowing, the Investment Development General Department entrusts the Bank … with the following:

1/ Project name to be borrowed:

2/ Total amount of capital the project owner can borrow:

Of which: - Construction and installation

- Equipment

3/ Preferential interest rate:

4/ Schedule for the Investment Development General Department to transfer funds to the Bank:

5/ Schedule for the Bank to repay the loan (principal, interest) to the Investment Development General Department:

- Start date of repayment:

- End date of full repayment:

6/ Based on the annual State plan, both parties must sign an appendix to the contract regarding the schedule for transferring funds and repaying the loan for the planned year to implement the contract.

7/ Entrustment fee for the Bank:

- Total amount:

- Payment method:

Article II: - Commitment to execute:

a) Entrusting party: The Investment Development General Department commits:

+ To transfer sufficient funds for the Bank to lend to the project owner according to the implementation progress of the investment project.

+ To perform the function of supervising the entrusted party in managing, lending in accordance with the regulations on State investment and credit.

b) Entrusted party: The Bank ... commits:

+ To properly manage, lend, supervise the use of borrowed funds, and collect debts (principal, interest) from the project owner in accordance with the Government's Investment Management Regulations and Construction Ordinance and the Circular guiding State credit lending issued by the Ministry of Finance.

+ To prepare and submit periodic reports to the Investment Development General Department on the implementation of investments, lending of funds, use of borrowed funds, and collection of repaid debts (principal, interest).

Article III: Other provisions regarding the content of the entrustment to be implemented:

.....

.....

.....

.....

Article IV: Responsibility for execution:

1- If the entrusted party uses the funds for purposes other than intended or for unauthorized recipients, the Investment Development General Department will suspend fund transfers and recover the transferred funds.

2- The contract shall be made in three copies, each party retains one copy, and one copy is sent to the Economic Court of the province or city. Any annual appendices to the contract (if any) shall also be made in three copies and distributed accordingly.

3- The contract becomes effective from the date of signing.

Drafted at ..., day month year 199...

Representative Representative

Entrusted party Entrusting party

Bank...Investment Development General Department

Form 06/TDNN

SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness

CONTRACT

LOANING STATE CREDIT FUNDS

Based on Circular number /TCĐT dated day month year 1994 of the Ministry of Finance guiding the lending of preferential credit funds from the State budget.

Based on the investment decision number dated day month year 1994 of...and the approved total budget estimate number dated day month year 1994 of ...

Based on the letter number dated day month year 1994 of the project owner requesting to borrow State credit funds for the investment project ...

- Borrower is the project owner:...represented by Mr./Ms.:...position:...representative.

- Lender is the Investment Development Bureau...represented by Mr./Ms.:...position:...representative.

Agreement to sign a State credit loan contract with the following terms:

Article I: - Based on the project documents that have been reviewed and meet the conditions for borrowing, the Investment Development Bureau lends funds to the project owner to implement the project:…

1- Total loan amount:

Of which - Construction and installation

- Equipment

2- Preferential interest rate:

3- Schedule for the Investment Development Bureau to allow withdrawal of the loan:

4- Schedule for the project owner to repay the debt (principal, interest) to the Investment Development Bureau:

- Start date of repayment:

- Deadline for full repayment of the debt (principal, interest):

5 - On the basis of the State plan, each year the two parties must sign an Appendix to the contract regarding the schedule for drawing down the loan and repaying the loan (principal, interest) for the planned year to implement the contract.

Article II: Commitment to Implementation:

a) Borrower: The Project Owner commits to:

- Implement borrowing, managing, and using borrowed funds in accordance with the Investment Management and Construction Regulation issued together with Decree No. 177/CP dated October 20, 1994 of the Government and the Circular guiding preferential borrowing from state budget funds - TC/DT dated [month year] 1994 of the Ministry of Finance.

- Using borrowed funds for their intended purpose.

- Maintaining accounting records to track the borrowing and use of borrowed funds in accordance with current state accounting regulations.

- Repaying the loan principal and interest in accordance with the signed contract.

- Fully and timely reporting on investment implementation and accounting reports to the Development Investment Department in accordance with regulations.

b) Lender: The Development Investment Department commits to:

- Providing sufficient funds according to the project's progress requirements.

- Fulfilling its supervisory function over the borrower regarding fund management and usage, and ensuring compliance with the national plan schedule.

Article III: Other Provisions that the Borrower Must Adhere To:

.....

.....

.....

.....

Article IV: Responsibility for execution:

1. If the Project Owner misuses borrowed funds or violates the repayment terms of the contract, the Development Investment Department will handle the matter in accordance with the provisions of the Circular guiding borrowing issued by the Ministry of Finance.

2. The contract shall be established in five copies, each party retains one copy, and sends one copy to the superior authority of each party, and one copy to the Court of the province or city where the project is located. Any annual appendices (if any) are detailed additional documents of the contract and also established in five copies sent as above.

3. This contract has been signed since this date.

Established at ..., day... month... year 199...

Representative Representative

Borrower Project Owner Development Investment Department providing loan

Project Owner Development Investment Department ...