Circular No. 107/2004/TT-BTC guiding the financial mechanism for projects using French Development Agency (AFD) loan funds under the Banking-Finance II Program.

Joint Resolutions, Circulars

Guidelines on financial mechanisms for projects

using French Development Agency (AFD) loan funds

under the Banking-Finance Program II

Pursuant to Decree No. 52/1999/NĐ-CP dated July 8, 1999 of the Government on the issuance of the Investment and Construction Management Regulation and Decrees No. 12/2000/NĐ-CP dated May 5, 2000 and No. 07/2003/NĐ-CP dated January 30, 2003 of the Government on amending and supplementing certain provisions of the Investment and Construction Management Regulation and guiding documents;

Pursuant to Decree No. 17/2001/NĐ-CP dated 4/5/2001 of the Government on the issuance of the Regulation on management and use of official development assistance;

Pursuant to Decree No. 60/2003/NĐ-CP dated 6/6/2003 of the Government detailing and guiding the implementation of the State Budget Law;

Pursuant to the Credit Agreements Nos. CVN 1075 02 J and 1075 01 H dated 15/1/2004 between the Ministry of Finance on behalf of the Government of Vietnam Male and the French Development Agency (AFD) providing funding for the Banking-Finance Program II (hereinafter referred to as the Program);

The Ministry of Finance provides guidelines on financial mechanisms for projects using AFD loan funds in the Program as follows:

                                                                        I. General Provisions

1. All AFD loan funds according to the Credit Agreements, after disbursement, shall be deposited into the State Budget for allocation to projects approved by competent authorities.

2. The list of projects using AFD loan funds according to the aforementioned Credit Agreements shall be approved by the Prime Minister. The list of projects for the first phase has been approved by the Prime Minister (in Circular No. 234/CP-QHQT dated February 19, 2004 of the Government) as Appendix 1 of this Circular.

3. The Ministry of Finance shall transfer funds through the State Treasury to allocate and pay for projects in the approved list by the Prime Minister. Project sponsors shall open accounts at the State Treasury where they regularly conduct transactions to receive funds and are responsible for managing and using funds in accordance with their intended purpose, regulations, and effectively.

II. Specific Provisions

1. Withdrawal of project funds:

After completing all investment procedures for the project as prescribed, the Project Sponsor shall submit the following documents to the Ministry of Finance (Department of Foreign Financial Affairs) to process withdrawal of AFD loan funds:

Decision approving the project, clearly distinguishing the contents of construction investment expenditures (if any) and administrative and public service expenditures of the project.

Feasibility study report/project document already approved.

Annual financial plan of the project already approved, detailed quarterly in accordance with Circular Joint No. 02/2003/TTLT-BKH-BTC dated March 17, 2003 of the Ministry of Planning and Investment and the Ministry of Finance regarding guidance on preparing financial plans for programs and projects using official development assistance.

2. Preparation of plans and transfer of funds for payment:

2.1 The preparation of financial plans, approval, and allocation to project sponsors shall be carried out in accordance with the provisions of the State Budget Law and guiding documents implementing the State Budget Law and Circular Joint No. 02/2003/TTLT-BKH-BTC dated March 17, 2003 of the Ministry of Planning and Investment and the Ministry of Finance on guidance for preparing financial plans for programs and projects using official development assistance.

Based on the financial plans of the projects prepared by the supervising agencies, the Ministry of Planning and Investment (leading for construction investment projects or construction components in mixed projects) and the Ministry of Finance (Department of Administrative and Public Service Financial Affairs leading for administrative and public service projects or components in mixed projects) shall examine and consolidate the annual financial plans of projects using AFD loan funds to incorporate them into the State Budget estimate.

2.2 The management and allocation, payment system for projects shall be implemented in accordance with the following Circulars:

Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance guiding the implementation of Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government detailing and guiding the implementation of the State Budget Law.

Circular No. 44/2003/TT-BTC dated May 15, 2003 and Circular No. 45/2004/TT-BTC dated May 21, 2004 of the Ministry of Finance guiding the management and payment of investment capital and public service capital with investment and construction nature from state budget funds.

Circular No. 79/2003/TT-BTC dated August 13, 2003 of the Ministry of Finance guiding the management, allocation, and payment of state budget expenditures through the State Treasury.

3. Inspection:

Supervising agencies shall cooperate with the State Treasury to inspect the implementation of financial plans, compliance with financial management regulations by project sponsors, promptly reflect any difficulties in management and payment of funds to the Ministry of Finance and the Ministry of Planning and Investment for appropriate solutions.

4. Reporting System:

Quarterly, no later than 15 working days after the end of each quarter, and annually, no later than January 31 of the following year, project sponsors are responsible for reporting on fund disbursement and usage (according to the forms specified in Appendices 5 and 7 of Circular No. 06/2001/TT-BKH dated September 20, 2001 of the Ministry of Planning and Investment guiding the implementation of the Regulation on management and use of official development assistance issued together with Decree No. 17/2001/NĐ-CP dated May 4, 2001 of the Government) to the supervising agencies and the Ministry of Finance (Department of Foreign Financial Affairs) for consolidation and reporting on the overall implementation of the Program to AFD, serving as the basis for AFD to continue disbursing funds for projects under the Program.

Within six months after the completion of the project, the project sponsor shall prepare a final project report (with confirmation from the State Treasury that provided the funds about the amount disbursed and paid to the project) to be submitted to the Ministry of Finance (Department of Foreign Financial Affairs), the Ministry of Planning and Investment, and the State Bank of Vietnam for consolidation of final project reports and the Program to be sent to AFD in accordance with the commitments in the Credit Agreements.

III. Implementation Organization

This Circular takes effect fifteen days after its publication in the Official Gazette.
The Ministry of Finance, the Ministry of Planning and Investment, supervising agencies, and project sponsors are responsible for strictly implementing the provisions of this Circular.
During implementation, if any difficulties arise, the relevant agencies and units are requested to promptly reflect them to the Ministry of Finance for study and resolution.