Circular No. 1238-TC/HCSN regarding guidance on the distribution and use of interest from loans from the National Fund for Employment Support for small projects.

LETTER

DECISION NO. 1238 TC/HCSN OF THE MINISTRY OF FINANCE ON APRIL 19, 1997
GUIDING THE DISTRIBUTION AND USE OF INTEREST FOR LOANS FROM THE NATIONAL EMPLOYMENT SETTLEMENT FUND ACCORDING TO SMALL PROJECTS
FROM
SMALL PROJECTS

Respectfully submitted to:

               - Central agencies of mass organizations under the central level

              - People's Committees of provinces and centrally governed cities

The Ministry of Finance issued Decision No. 950 TC/HCSN dated October 17, 1996 on the distribution and use of interest for loans from the National Employment Settlement Fund according to small projects; To facilitate conditions for units to organize, implement, and effectively utilize, the Ministry of Finance provides additional guidance on the following points:

I. PRINCIPLES OF USE:

a. The amount of interest distributed to units is a source of funding used to support advisory, appraisal, and management work for small projects aimed at employment settlement of these units.

b. Management and utilization of funds from loan interest shall be carried out according to regulations applicable to funds allocated from the State Budget and must be reported and settled with financial authorities at all levels.

c. The distribution and use of interest for loans stipulated in Article 1 of Decision No. 950 TC/HCSN dated October 17, 1996 of the Ministry of Finance are as follows:

- Mass organizations within the scope of entities decided by the Chairman of the Provincial or City People's Committee to distribute interest from the portion of interest that the province or city receives (26% of the total interest) will not transfer this amount to the central agency.

- Ministries, mass organizations at the central level within the scope of entities decided by the Joint Ministry to distribute interest from the portion of interest managed by central-level agencies (4% of the total interest) will not redistribute this amount to mass organizations at the local level.

- The portion of interest of 30% transferred to the Central Treasury to establish a risk reserve fund will be distributed and used according to the decision of the Minister of Labor, War Invalids and Social Affairs (after consultation with the Ministry of Finance and the Ministry of Planning and Investment).

II. CONTENT OF EXPENSES AND SETTLEMENT OF FUNDS
FROM THE ALLOCATED INTEREST

1. For the portion of interest of 40% designated to cover management costs for lending, recovery of loans, and information reporting by the State Treasury system, it shall be implemented according to Circular No. 768 KB/ĐT dated November 6, 1996 of the Central State Treasury on guiding amendments and supplements to the distribution and use of interest for loans from the National Employment Settlement Fund.

2. For the portion of interest of 26% allocated to local program management agencies (excluding the State Treasury) and the portion of interest of 4% allocated to central program management agencies, budget estimates and settlements shall be made as follows:

a. Preparation of budget estimates:

Each year and quarter, based on the amount distributed according to the decision of the Provincial or City People's Committee (for local agencies) or according to the decision of the Ministry of Labor, War Invalids and Social Affairs (for central agencies), these agencies shall prepare detailed budget estimates for each item of expenditure according to the current State Budget Classification and send them to the Treasury and finance departments at the same level (at the local level, to the State Treasury and the Provincial Department of Finance and Price Control; at the central level, to the Central State Treasury and the Ministry of Finance) as a basis for considering the allocation of funds.

b. Content of expenditures:

Funds from the interest source shall be used for the following main purposes:

+ Expenditure on office supplies, printing materials to support the implementation of training sessions, project development guidance, project review and evaluation, information reporting, and project management.

+ Expenditure on business guidance (if any), mid-term and final reviews of lending activities. The expenditure level shall be implemented according to the regulations set by the State for conferences.

+ Expenditure on publicity and guidance through mass media...

+ Expenditure on overtime and travel expenses for staff directly involved in project review, inspection, monitoring, and management. The expenditure level shall be according to the regulations set by the State.

+ Expenditure on salaries for contracted staff directly engaged in project review, inspection, monitoring, and management tasks (if any) according to the salary regulations set by the State.

+ Expenditure on purchasing and repairing equipment and tools to support lending activities for employment settlement such as fuel, furniture, computers, etc., to support administrative operations, inspections, and supervision of project implementation.

+ Expenditure on surveys, evaluations of programs, research and improvement of policies, drafting and promulgating guidelines for programs.

+ Expenditure on rewards for units and individuals who have achieved significant results in guidance, organization of lending, and recovery of loan capital. The maximum reward for a unit is 200,000 dong every six months, and for an individual, it is 100,000 dong every six months. The authority to decide on rewards for local units is the Provincial or City People's Committee; for central ministries, associations, and mass organizations, it is the Minister or the Chairman of the Central Association.

To ensure proper use and efficient utilization of these funds, the Departments of Labor, War Invalids and Social Affairs, Planning and Investment, and Finance and Price Control must closely cooperate with the State Treasury system to assist the Chairman of the People's Committee in monitoring, distributing, and managing funds according to the approved budget within the allocated amount, serving practical needs for lending activities for employment settlement, and not misusing the funds for other purposes.

c. Settlement:

Each quarter and annually, units must settle the interest and expenditure funds with the Treasury and finance departments at the same level according to Decision No. 950 TC/HSCN dated October 17, 1996 of the Ministry of Finance and current regulations.

Expenditures must follow the approved budget estimates. In cases where the content of expenditures is adjusted within the approved capital limit, the unit must submit a letter to the Treasury and finance departments at the same level requesting adjustments. Any expenditures outside the approved budget estimates will not be accepted for settlement. Units that fail to report quarterly and annual settlements will have their interest payments suspended until they provide new settlement reports.

3. Regarding the amount of interest at 30% transferred to the Central State Treasury for establishing a risk reserve fund:

a. Content of expenditure: implemented according to the provisions at point c, Article 1, Decision 950 TC/HCSN dated October 17, 1996 of the Ministry of Finance.

b. Allocation and settlement:

b.1. For loan funds subject to unavoidable risks, the Joint Ministries of Labor, Invalids and Social Affairs - Finance - Planning and Investment shall provide specific guidance on procedures and processes for handling, allocation, and settlement.

b.2. For overdue loan funds that are difficult to collect: although the State Treasury has repeatedly urged, the project sponsors deliberately delay repayment, necessitating the transfer of project files to the police and legal authorities for debt recovery. After the project sponsor repays the principal and interest (including overdue interest penalties), the State Treasury will pay a bonus to the police agency equal to 5% of the total recovered principal.

- Regarding the source of payment to police agencies for debt recovery cooperation: The local State Treasury will advance funds for payment while reporting to the Central State Treasury (along with photocopied original documents such as loan collection contracts from the National Fund for Employment Resolution, relevant documents regarding bonuses paid to the police agency clearly stating the name, signature of the recipient, seal of the police agency and the State Treasury, and attaching a confirmation of loan recovery from the National Fund for Employment Resolution issued by the State Treasury) to serve as the basis for the Central State Treasury (in coordination with the Management Board of the National Fund for Employment Resolution) to review and transfer funds to cover the costs of debt recovery to reimburse the advanced funds from the local State Treasury and to settle accounts. The Central State Treasury is responsible for compiling and reporting the settled funds provided for debt recovery costs to the Joint Ministries.

b.3. For projects with overdue debts that must be transferred to the Court: The local State Treasury will pay the provisional litigation fee according to the regulations on litigation fees and registration fees of the Court. Subsequently, based on the Court's decision, if the State Treasury does not have to bear the litigation fee, the entire provisional litigation fee will be refunded. If part of the litigation fee is to be borne, the State Treasury will submit the payment receipt and the Court's decision to the Central State Treasury as the basis for reviewing and transferring funds to reimburse the litigation costs advanced by the local State Treasury.

It is requested that central agencies, mass organizations, subordinate organizations, provincial and municipal People's Committees under the central government instruct relevant departments to strictly follow the guidance of this Circular. In case of difficulties during implementation, they are advised to report to the Ministry of Finance for consideration and resolution.