Circular No. 116 TC/ĐT on guiding the management and use of loan funds from the Government of China for basic construction investment

CIRCULAR

DECREE NO. 142/1998/TT-BTC OF OCTOBER 29, 1998 OF THE MINISTRY OF FINANCE GUIDING THE SUPPLEMENT AND AMENDMENT TO CIRCULAR NO. 116 TC/ĐT OF DECEMBER 24, 1994 ON THE MANAGEMENT AND USE OF 80 MILLION NDT FROM THE ODA LOAN AGREEMENT WITH THE GOVERNMENT OF CHINA

Pursuant to Decree No. 87/CP dated August 5, 1997 of the Government on the issuance of the Regulation on Management and Use of Official Development Assistance (ODA) Sources.
Pursuant to the Economic and Technical Cooperation Agreement signed on December 2, 1992 between the Government of the Socialist Republic of Vietnam and the Government of the People's Republic of China.
Pursuant to Circular No. 6237/QHQT dated November 8, 1994 of the Office of the Government on the use of the 80 million NDT credit from China.
Pursuant to Circular No. 4242/QHQT dated August 29, 1996 of the Office of the Government on changing the purpose of using 30 million NDT under the aforementioned 80 million NDT credit.
After reaching consensus with relevant agencies, the Ministry of Finance guides the supplement and amendment to Circular No. 116 TC/ĐT dated December 24, 1994 on the management and use of 30 million NDT from the ODA loan worth 80 million NDT provided by the Government of China as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. Purpose of use: The preferential loan amounting to 30 million NDT from the Government of China previously allocated for water supply projects in northern mountainous provinces shall now be transferred to enterprises that were previously built with Chinese assistance and have borrowed funds to upgrade their technological equipment. Specific projects will be decided by competent authorities in accordance with the regulations on the management and use of official development assistance promulgated together with Decree No. 87/CP dated August 5, 1997 of the Government.

2. The Ministry of Finance entrusts the General Department of Investment and Development to implement the re-lending of the aforementioned loan, responsible for recovering the debt for the State Budget and entitled to fees as prescribed.

3. Method of withdrawing funds: The Bank for Foreign Trade shall act as the transaction bank including foreign exchange settlement activities, maintaining a ledger for fund withdrawals, and charging service fees according to the current "Service Fee Schedule" of the Bank for Foreign Trade Vietnam. Projects using the 30 million NDT under the loan agreement signed on December 2, 1992 shall apply the direct payment withdrawal method stipulated in the Bank Agreement between the Bank for Foreign Trade Vietnam and the Bank of China.

II. SPECIFIC PROVISIONS:

1. Conditions for Re-lending:

- The interest rate for the rescheduled loan is 4% annually on the outstanding principal, wherein the fee for the rescheduled loan enjoyed by the General Department of Investment and Development is 0.3%/year on the outstanding principal for loans valued below 3 million USD with a term of less than 12 years; 0.25%/year on the outstanding principal for loans valued below 3 million USD with a term of more than 12 years; 0.2%/year on the outstanding principal for loans valued above 3 million USD. Transaction fees in international payment transactions shall be paid directly by the project sponsor or the entrusted import agency (in accordance with the entrusted import contract) to the serving bank based on actual occurrences.

- The overdue interest rate is 150% of the rescheduled loan interest rate.

- The term of the rescheduled loan shall be determined by the Ministry of Finance (Department of Foreign Financial Affairs and General Department of Investment and Development) based on the approved investment project and shall not exceed the remaining term of the loan agreement with China (maximum loan term until 2012; maximum grace period until 2002).

2. Currency for Debt Repayment and Exchange Rate:

- The currency for debt repayment is Renminbi (RMB). The debtor may repay the Ministry of Finance in RMB, VND, or freely convertible foreign currencies.

- In cases where repayment is made in VND, the exchange rate applied to convert VND to NDT is the average inter-bank NDT/VND rate published by the State Bank of Vietnam every ten days. This rate will be notified by the General Department of Investment and Development via fax to local investment departments upon receipt of notification from the State Bank.

- In case of repayment in USD or other strong foreign currencies: it shall be applied in accordance with Circular No. 3000 TC/TCDD dated August 10, 1998 of the Ministry of Finance guiding the exchange rate for debt recovery.

3. Responsibilities of Relevant Agencies:

- The Department of Foreign Financial Affairs of the Ministry of Finance is responsible for signing the Entrusted Loan Rescheduling Contract with the General Department of Investment and Development; monitoring the process of loan withdrawal, arranging funds for debt repayment when due, and processing budgetary receipts and payments.

- The General Department of Investment and Development of the Ministry of Finance is responsible for signing the credit loan rescheduling contracts with project sponsors according to the prescribed conditions; monitoring the implementation of projects, recovering debts, and reporting to the Ministry of Finance on the recovery situation every six months. Upon recovery of the loan, the General Department of Investment and Development system shall immediately repay into the state budget.

- Project sponsors are responsible for signing the loan rescheduling contract with the General Department of Investment and Development, implementing tender procedures for purchasing equipment according to current regulations taking into account the special conditions of the Chinese loan. Project sponsors shall directly or cooperate with entrusted import agencies to negotiate and sign commercial contracts with Chinese counterparts, ensuring that the value of the portion of the contract funded by the loan does not exceed the value in NDT of the signed credit contract. Project sponsors are responsible for repaying the principal and interest according to the terms specified in the credit contract.

- After the commercial contract has been approved by the Ministry of Trade, the Ministry of Finance will proceed with the contract formalities, sending them to the Bank for Foreign Trade Vietnam for the bank to guide project sponsors in implementing foreign exchange settlement procedures according to the direct payment withdrawal method consistent with the Bank Agreement already signed with the Chinese side. Upon receiving the withdrawal notice from the Chinese Bank, the Bank for Foreign Trade Vietnam will notify the Ministry of Finance to process budgetary receipts and payments.

III. IMPLEMENTATION PROVISIONS:

This Circular takes effect fifteen days from the date of signature. During the implementation process, if there are any difficulties, please promptly reflect them to the Ministry of Finance for consideration and resolution.