Circular No. 135/2007/TT-BTC guiding certain points on the organization and implementation of the state budget for the year 2008

CIRCULAR

Guidelines on certain points regarding the organization and implementation of the state budget for 2008

Pursuant to Resolution No. 08/2007/QH12 dated November 12, 2007 of the National Assembly, session two, term XII, on the state budget for 2008;

Pursuant to Resolution No. 09/2007/QH12 dated November 14, 2007 of the National Assembly session two, term XII, on the allocation of the central budget for 2008;

Pursuant to Decision No. 1569/QĐ-TTg dated November 19, 2007 of the Prime Minister on the allocation of the state budget for 2008;

The Ministry of Finance provides guidelines on certain points regarding the organization and implementation of the state budget for 2008 as follows:

A. ON THE ALLOCATION AND ASSIGNMENT OF THE STATE BUDGET FOR 2008:

I. ON THE GRADING OF REVENUE SOURCES AND EXPENDITURE TASKS FOR LOCAL BUDGETS:

1. In 2008, which is within the period of stabilizing the national budget between the central budget and local budgets (2007-2010), apart from implementing the stabilization of the percentage share of revenue sources between the central budget and each local budget according to Resolution No. 1051/2006/NQ-UBTVQH11 dated November 7, 2006 of the Standing Committee of the National Assembly, the stabilization of the supplementary balance from the central budget to each local budget according to the level assigned by the Prime Minister to each province and centrally-administered city at Decision No. 1506/2006/QĐ-TTg dated November 14, 2006; the central budget supplements local budgets to implement salary reform according to the resolution of the National Assembly and assigned by the Prime Minister to each province and centrally-administered city at Decision No. 1569/QĐ-TTg dated November 19, 2007.

2. The grading of revenue sources and expenditure tasks between local government budgets, the percentage share of revenue sources between different levels of local budgets, and the supplementary balance from higher-level budgets to lower-level budgets, apart from implementing stability according to the resolutions of People's Councils and decisions of People's Committees for the five-year budget period during the stabilization period; provincial budgets supplement the balance to implement salary reform according to the resolutions of provincial People's Councils and decisions of provincial People's Committees.

3. Implementing the mechanism to balance land use fee revenues in the local budget for investment in economic and social infrastructure and using part of these revenues to carry out cadastral work, establish a database of land ownership records, and issue land use right certificates. Localities allocate funds to carry out cadastral work, establish a database of land ownership records, and issue land use right certificates in 2008 according to the Government's Resolution on key measures to guide the implementation of the socio-economic plan and state budget for 2008; striving to complete the issuance of land use right certificates for the three main types of land—agricultural, forestry, and residential—by 2010.

4. Pursuant to Resolution No. 68/2006/QH11 dated October 31, 2006 of the National Assembly, lottery revenues will not be included in the local budget revenue and expenditure balance but will be managed through the state budget; based on the ability to collect lottery revenues in 2007, the provincial People's Committees shall submit to their respective People's Councils for decision on the lottery revenue budget for 2008 in accordance with local conditions; simultaneously, these revenues shall be used to invest in important social welfare projects in the locality, focusing on educational and health facilities as stipulated in the Government's Resolution on key measures to guide the implementation of the socio-economic plan and state budget for 2008.

II. ALLOCATION AND ASSIGNMENT OF THE STATE BUDGET:

1. Allocation and assignment of budget revenue:

a) Ministries, central agencies, provincial and municipal people's committees shall implement the assignment of revenue collection tasks for 2008 to subordinate units and lower-level authorities, ensuring that the target is at least 5% higher than the revenue budget assigned by the Prime Minister.

b) The allocation and assignment of budget revenue must be based on the assessment of revenue collection results in 2007; taking into account tax laws, revenue systems; the growth rate of each industry and sector, the specific development potential of businesses, organizations, and individual traders; requirements to implement measures against revenue loss and commercial fraud, and to fully recover outstanding tax debts; and the implementation of tax exemption and reduction policies as prescribed by the law on state budget revenue.

2. Allocation and assignment of budget expenditure:

a) Allocation and assignment of development expenditure:

Ministries, central agencies, and localities must allocate and assign development expenditure budgets in compliance with regulations on investment management and construction, while ensuring the following requirements:

- Ministries, central agencies:

+ Allocate development expenditure budgets to ensure full repayment of previously advanced funds that need to be recovered into the 2008 budget according to the Prime Minister's decision on the budget allocation; allocate capital to settle construction debts decisively, and refrain from allocating capital to projects lacking the required investment procedures under the law.

+ Allocate capital to ongoing projects with the potential to be completed in 2008.

+ After allocating for the above tasks, allocate for new projects that meet the conditions for capital allocation according to established regulations, focusing on concentrating capital and avoiding dispersion.

- Provinces and centrally-administered cities:

+ Allocate the budget for investment in construction projects assigned to settle the outstanding construction debts of projects funded by the state budget according to the prescribed regulations, without generating new arrears and without allocating funds for projects that have not completed the required investment procedures; allocate sufficient funds (both principal and interest) for investment mobilization as stipulated in Clause 3, Article 8 of the State Budget Law due for payment in 2008; repay loans under preferential credit programs for implementing rural canal consolidation, rural transportation infrastructure, village craft infrastructure, and aquaculture infrastructure due for repayment in 2008; central government funds advanced must be recovered into the 2008 budget according to the Prime Minister's decision on the allocation of the budget.

+ Ensure adequate funding for counterpart contributions for projects using ODA funds; allocate funds to implement programs and projects to mitigate the consequences of natural disasters...

+ For local important programs, projects, and tasks implemented from supplementary targeted funds from the central budget, they must be allocated strictly according to the assigned objectives and budgets.

+ Focus funds on projects and works carried over from previous years with the potential to be completed in 2008.

+ Allocate and assign development expenditure budgets to subordinate agencies and lower-level authorities for education and vocational training, science and technology sectors, which shall not be lower than the levels assigned by the Prime Minister for these sectors.

+ After allocating funds for the aforementioned tasks, allocate funds for newly initiated projects that meet the conditions for fund allocation according to the prescribed regulations, focusing on concentrating funds and avoiding dispersion.

+ In cases where there is a need to mobilize funds for the construction of economic and social infrastructure projects guaranteed by provincial budgets within the five-year plan (2006-2010) approved by the Provincial People's Councils, it is permissible to mobilize domestic funds, ensuring that the maximum level of debt does not exceed 30% of the annual domestic construction investment budget of the provincial budget according to the State Budget Law and guiding documents. Specifically, for Hanoi and Ho Chi Minh City, the mobilization of funds shall be carried out according to Decree No. 123/2004/NĐ-CP dated May 18, 2004, and Decree No. 124/2004/NĐ-CP dated May 18, 2004, issued by the Government.

Additionally, for localities requiring temporary advance funds to implement projects and works of infrastructure development that can generate revenue to repay the advance funds, which have been approved by competent authorities to attract domestic and foreign economic organizations' investments, shall follow Circular No. 49/2005/TT-BTC dated June 9, 2005, issued by the Ministry of Finance.

b) Allocate and assign the budget for economic and social public services, national defense, security, administrative management, Party, and mass organizations in 2008:

Ministries, central agencies, and localities when allocating and assigning the budget for economic and social public services, national defense, security, administrative management, Party, and mass organizations in 2008, shall detail according to sectors (not detailed according to four groups of items) and note the following points:

- Continue to allocate funds to implement the e-commerce development plan for the period 2006-2010 approved by the Prime Minister in Decision No. 222/2005/QĐ-TTg dated September 15, 2005, and the guidance of the Ministry of Commerce (now the Ministry of Industry and Trade).

- Ensure funds for administrative reform implementation according to Decision No. 94/2006/QĐ-TTg dated April 27, 2006, of the Prime Minister approving the Administrative Reform Plan for the period 2006-2010.

- Allocate funds to support the development of rural industries according to Decree No. 66/2006/NĐ-CP dated July 7, 2006, of the Government and Circular No. 113/2006/TT-BTC dated December 28, 2006, of the Ministry of Finance guiding certain contents about state budget support for the development of rural industries according to Decree No. 66/2006/NĐ-CP.

- Allocate funds to ensure the needs for information technology application activities according to Decree No. 64/2007/NĐ-CP dated April 10, 2007, of the Government.

- Allocate funds to implement Decision No. 144/2006/QĐ-TTg dated June 20, 2006, of the Prime Minister on applying the ISO 9001:2000 quality management system in the operation of administrative agencies.

- Allocate state budget funds from economic public service revenues to ensure planning work at both central and local levels according to the guidelines of the Ministry of Finance.

- For ministries and central agencies when allocating and assigning the budget for economic and social public services, national defense, security, administrative management, Party, and mass organizations (including salary reform funds according to Decree No. 93/2006/NĐ-CP dated September 7, 2006, and Decree No. 94/2006/NĐ-CP dated September 7, 2006, of the Government) for budget-using units, they must allocate strictly according to the total and detailed budgets assigned by the Prime Minister, guided by the Ministry of Finance; ensure funds for important tasks as prescribed by law and those decided by the Prime Minister; allocate budgets in accordance with the prescribed standards and norms.

Additionally, when allocating budgets to public service units, based on the assigned budget, ministries and central agencies decide the appropriate allocation of funds for public service units, reducing investment from the state budget for units with good self-generated income to increase investment for units facing difficulties and mainly relying on state budget funds.

- For provinces and centrally-administered cities when allocating and assigning the budget for economic and social public services, national defense, security, administrative management, Party, and mass organizations (including salary reform funds according to Decree No. 93/2006/NĐ-CP dated September 7, 2006, and Decree No. 94/2006/NĐ-CP dated September 7, 2006, of the Government) for subordinate agencies and lower-level authorities, they must comply with the provisions of the State Budget Law, noting the following points:

The allocation and transfer of the 2008 state budget expenditure for education and training, vocational training, science and technology sectors to subordinate agencies and units, and lower-level authorities shall not be lower than the level allocated by the Prime Minister. Specifically, for the allocation and transfer of the 2008 state budget expenditure for the education and training sector, it must ensure funding for the tasks at all levels of education, with particular attention given to funding for the universalization of preschool education for five-year-olds. Implement fully the preschool education development policy according to Decision No. 161/2002/QĐ-TTg dated November 15, 2002, and Decision No. 149/2006/QĐ-TTg dated June 23, 2006, both issued by the Prime Minister, approving the project "Preschool Education Development Phase 2006-2015."

For the expenditure on environmental protection services: The People's Committee of each province shall base their budget on the allocation made by the Minister of Finance, the policies and regulations, the volume of tasks to be carried out, and the actual conditions of the locality, and submit to the Provincial People's Council for decision. The allocation and assignment of expenditures for environmental protection services shall be carried out in accordance with Circular Joint No. 114/2006/TTLT-BTC-TNMT dated December 29, 2006, issued jointly by the Ministry of Finance and the Ministry of Natural Resources and Environment. Among these, funds should be arranged for the disposal of medical waste, environmental sanitation in schools, waste disposal sites, purchasing equipment for waste collection, and paying special attention to hotspots of environmental pollution.

Based on the 2008 state budget allocation, provinces and centrally governed cities shall allocate funds to implement the following policies:

(1) Funding support for the operation of the Association for Promoting Learning at all levels according to Directive No. 11-CT/TW dated April 13, 2007, of the Central Committee, and document No. 9134/BTC-HCSN dated July 10, 2007, of the Ministry of Finance.

(2) Additional funding to implement staffing standards for educational and health public services according to Circular Joint No. 35/2006/TTLT-BGDĐT-BNV dated August 23, 2006, issued jointly by the Ministry of Education and Training and the Ministry of Home Affairs, and Circular Joint No. 08/2007/TTLT-BYT-BNV dated June 5, 2007, issued jointly by the Ministry of Health and the Ministry of Home Affairs.

(3) Funding to implement the policy of supporting relocation and settlement for ethnic minority groups during the period 2007-2010 according to Decision No. 33/2007/QĐ-TTg dated March 5, 2007, of the Prime Minister.

(4) Funding for the maintenance and repair of infrastructure projects under the Program for Socio-Economic Development of Particularly Difficult Communes in Ethnic Minority and Mountainous Areas during the period 2006-2010 according to Circular Joint No. 676/2006/TTLT-UBDT-KHĐT-TC-XD-NNPTNT dated August 8, 2006, issued jointly by the State Committee for Ethnic Minorities, the Ministry of Planning and Investment, the Ministry of Finance, the Ministry of Construction, and the Ministry of Agriculture and Rural Development.

(5) Funding to implement policies and benefits established by competent authorities during the management of the 2008 state budget according to prescribed regulations.

When allocating and transferring the 2008 state budget, in addition to ensuring funding for the policies and programs that were budgeted in 2007 and will continue to be implemented in 2008 and subsequent years, the following points should be noted:

(1) Starting from 2008, funding for health examinations and treatments for the poor (as defined in Decision No. 170/2005/QĐ-TTg dated May 27, 2005, of the Prime Minister regarding the poverty standard applicable for the period 2006-2010) shall be provided at an average cost of VND 130,000 per person per year; free health examination and treatment for children under six years old according to the Law on Child Protection, Care, and Education at an average cost of VND 130,000 per child per year.

(2) Funding to implement Decree No. 150/2006/NĐ-CP dated December 12, 2006, of the Government, and Circular Joint No. 10/2007/TTLT-BLĐTB&XH-HCCBVN-BTC-BQP dated July 25, 2007, issued jointly by the Ministry of Labor, Invalids and Social Affairs, the Vietnam Veterans Association, the Ministry of Finance, and the Ministry of Defense, guiding the implementation of certain provisions of the Ordinance on Veterans.

(3) Funding to implement the policy of exempting water resource fees according to Decree No. 154/2007/NĐ-CP dated October 15, 2007, of the Government.

(4) Funding to implement social assistance policies for beneficiaries according to Decree No. 67/2007/NĐ-CP dated April 13, 2007, of the Government.

(5) Funding to implement the policy of reducing staff numbers according to Decree No. 132/2007/NĐ-CP dated August 8, 2007, of the Government.

(6) Funding to implement the program for socio-economic development of border communes between Vietnam and Laos; Vietnam and Cambodia until 2010 according to Decision No. 160/2007/QĐ-TTg dated October 17, 2007, of the Prime Minister.

(7) Funding to award the 30-Year Party Membership Badge according to Notification No. 51-TB/TW dated December 25, 2006, and Notification No. 63-TB/TW dated March 9, 2007, of the Central Committee.

(8) Funding to implement Decree No. 134/2006/NĐ-CP dated November 14, 2006, of the Government, which stipulates the recruitment system into higher education institutions, colleges, and secondary technical schools within the national education system, and the guidance of the joint circular of the Ministry of Education and Training, the Ministry of Labor, Invalids and Social Affairs, the Ministry of Finance, the Ministry of Home Affairs, and the State Committee for Ethnic Minorities.

(9) Funding for veterinary officers at commune level according to document No. 1569/TTg-NN dated October 19, 2007, of the Prime Minister.

For the above policies and programs, based on the central government's budget capacity and the degree of difficulty of localities, the central government will provide additional support to local budgets (outside the 2008 allocation) for allocation and assignment to units for implementation.

c) Allocation and transfer of the state budget to implement national target programs, projects, and tasks in 2008:

BASED ON THE BUDGET FOR IMPLEMENTING THE NATIONAL TARGET PROGRAM AND OTHER IMPORTANT PROGRAMS, PROJECTS, AND TASKS ASSIGNED BY THE PRIME MINISTER, MINISTRIES, CENTRAL ORGANIZATIONS, PROVINCE AND CITY PEOPLE'S COMMITTEES UNDER THE DIRECT CONTROL OF THE CENTRAL GOVERNMENT SHALL ALLOCATE AND ASSIGN BUDGETS TO SUBORDINATE UNITS AND LOWER LEVEL AUTHORITIES TO ENSURE THE SET OBJECTIVES AS DETERMINED BY AUTHORIZED BODIES. AT THE SAME TIME, THEY SHALL INTEGRATE NATIONAL TARGET PROGRAM FUNDS IN ACCORDANCE WITH REGULATIONS TO ENSURE EFFECTIVE IMPLEMENTATION; IN ADDITION TO TARGETED SUPPORT FUNDS FROM THE STATE BUDGET, PROVINCES AND DIRECTLY CONTROLLED CITIES SHALL ACTIVELY ARRANGE LOCAL BUDGETS AND LEGAL FINANCIAL RESOURCES TO IMPLEMENT THE TASKS. IF THE ALLOCATION AND ASSIGNMENT OF BUDGETS DO NOT MEET THE SET OBJECTIVES, THE SUPERIOR FINANCIAL AUTHORITY SHALL TEMPORARILY SUSPEND THE TRANSFER OF ADDITIONAL FUNDS TO THE LOWER LEVEL BUDGET UNTIL THE CORRECT ALLOCATION AND ASSIGNMENT OF BUDGETS ARE RECEIVED.

THE NATIONAL POOR COMMUNITY DEVELOPMENT PROGRAM IN THE 2006-2010 PERIOD (PROGRAM 135 PHASE II) IS ALLOCATED ACCORDING TO THE ADJUSTED LEVEL IN DECISION NUMBER 1445/QĐ-TTg ON OCTOBER 25, 2007 ISSUED BY THE PRIME MINISTER; THE POLICY TO SUPPORT LAND FOR PRODUCTION, HOUSING, HOUSES, AND LIVING WATER FOR POOR ETHNIC MINORITY HOUSEHOLDS (PROGRAM 134) IS ALLOCATED ACCORDING TO THE ADJUSTED LEVEL IN DOCUMENT NUMBER 1326/TTg-ĐP ON SEPTEMBER 17, 2007 ISSUED BY THE PRIME MINISTER.

THE EDUCATION AND TRAINING PROGRAM SHALL BE IMPLEMENTED ONLY AFTER THE PRIME MINISTER APPROVES THE PROGRAM AND ISSUES GUIDELINES.

d) CONTINUE TO ARRANGE THE BUDGET AND IMPLEMENT THE FINANCIAL MECHANISM TO CREATE SOURCES TO IMPLEMENT THE NEW SALARY SYSTEM FROM JANUARY 1, 2008 ACCORDING TO THE RESOLUTION OF THE NATIONAL ASSEMBLY AND GOVERNMENT DECREES, WHEREBY:

- MINISTRIES, CENTRAL ORGANIZATIONS, AND PROVINCE AND CITY PEOPLE'S COMMITTEES UNDER THE DIRECT CONTROL OF THE CENTRAL GOVERNMENT MUST DETERMINE AND ASSIGN A SAVINGS AMOUNT OF 10% OF REGULAR EXPENSES (BASED ON THE INCREASE IN THE 2008 BUDGET FOR REGULAR EXPENSES COMPARED TO THE 2007 BUDGET, EXCLUDING PAYROLL EXPENSES AND PAYROLL-LIKE EXPENSES AT THE MINIMUM WAGE OF 450,000 VND/MONTH) WHEN ALLOCATING AND ASSIGNING BUDGETS TO SUBORDINATE UNITS AND LOWER LEVEL BUDGETS TO IMPLEMENT THE NEW SALARY SYSTEM FROM JANUARY 1, 2008; ENSURING THAT THIS AMOUNT IS NOT LESS THAN THE LEVEL GUIDED BY THE MINISTRY OF FINANCE.

- MINISTRIES, CENTRAL ORGANIZATIONS SHALL GUIDE SUBORDINATE UNITS TO DEDICATE 40% OF THE AMOUNT RETAINED ACCORDING TO THE 2008 REGULATION (EXCEPT FOR THE HEALTH SECTOR WHICH IS 35%, AFTER DEDUCTING DRUG COSTS, BLOOD, INFUSION FLUIDS, CHEMICALS, REPLACEMENT MATERIALS, CONSUMABLE MATERIALS) TO IMPLEMENT THE NEW SALARY SYSTEM FROM JANUARY 1, 2008.

- LOCALITIES MUST USE ANY REMAINING BALANCE (IF ANY) AFTER ENSURING THE NEED FOR FUNDS TO IMPLEMENT GOVERNMENT DECREE NUMBER 93/2006/NĐ-CP ON SEPTEMBER 7, 2006, AND GOVERNMENT DECREE NUMBER 94/2006/NĐ-CP ON SEPTEMBER 7, 2006 IN 2008 TO IMPLEMENT THE NEW SALARY SYSTEM FROM JANUARY 1, 2008 FROM THE FOLLOWING SOURCES:

+ 50% OF THE INCREASE IN LOCAL REVENUE (EXCLUDING INCREASED REVENUE FROM LAND USE FEES) IN THE 2008 BUDGET COMPARED TO THE 2007 BUDGET AS ASSIGNED BY THE PRIME MINISTER;

+ 50% OF THE INCREASE IN LOCAL REVENUE (EXCLUDING INCREASED REVENUE FROM LAND USE FEES) REALIZED IN 2007 COMPARED TO THE 2007 BUDGET AS ASSIGNED BY THE PRIME MINISTER;

+ 10% OF THE SAVINGS IN REGULAR EXPENSES (EXCLUDING PAYROLL AND PAYROLL-LIKE EXPENSES) IN THE 2007 BUDGET;

+ 40% OF THE AMOUNT RETAINED ACCORDING TO THE 2008 REGULATION (EXCEPT FOR THE HEALTH SECTOR WHICH IS 35%, AFTER DEDUCTING DRUG COSTS, BLOOD, INFUSION FLUIDS, CHEMICALS, REPLACEMENT MATERIALS, CONSUMABLE MATERIALS);

+ FUNDS LEFT OVER FROM THE 2007 SALARY INCREASE THAT HAVE NOT BEEN USED YET;

+ FUNDS ALLOCATED FROM THE CENTRAL BUDGET IN THE 2008 BUDGET TO ENSURE ADDITIONAL FUNDS FOR THE SALARY LEVEL AS PROVIDED IN GOVERNMENT DECREE NUMBER 93/2006/NĐ-CP ON SEPTEMBER 7, 2006, AND GOVERNMENT DECREE NUMBER 94/2006/NĐ-CP ON SEPTEMBER 7, 2006.

IF MINISTRIES, CENTRAL ORGANIZATIONS, AND PROVINCE AND CITY PEOPLE'S COMMITTEES UNDER THE DIRECT CONTROL OF THE CENTRAL GOVERNMENT CANNOT SECURE ENOUGH FUNDS AFTER IMPLEMENTING THE ABOVE MEASURES TO CREATE SOURCES, THE CENTRAL BUDGET WILL PROVIDE SUPPORT TO ENSURE FUNDS FOR THE SALARY REFORM ACCORDING TO GOVERNMENT DECREES.

đ) ALLOCATE BUDGET RESERVES AT ALL LEVELS OF LOCAL GOVERNMENTS IN ACCORDANCE WITH THE LAW ON THE STATE BUDGET AND NOT LESS THAN THE LEVEL OF RESERVES ASSIGNED BY THE PRIME MINISTER TO ACTIVELY IMPLEMENT DISASTER PREVENTION, MITIGATION, AND RESPONSE EFFORTS, AS PROVIDED IN THE LAW ON THE STATE BUDGET.

e) DURING THE PROCESS OF DECIDING ON THE BUDGET ALLOCATION, IF THE PEOPLE'S COUNCIL DECIDES TO ASSIGN A HIGHER LOCAL BUDGET REVENUE THAN THE UPPER LEVEL HAS ASSIGNED DUE TO SETTING A MORE AGGRESSIVE TARGET, THEN THE INCREASED BUDGET EXPENDITURE (EXCLUDING INCREASED EXPENSES FROM LAND USE FEES) MUST BE DEDICATED TO 50% FOR SALARY REFORM; THE REMAINING PART SHOULD BE PRIORITIZED FOR IMPLEMENTING IMPORTANT TASKS, POLICIES, AND CHANGES DECIDED BY AUTHORIZED BODIES, SETTLING DELAYED PAYMENTS FOR BASIC CONSTRUCTION WORK ACCORDING TO REGULATIONS, SUPPLEMENTING LOCAL BUDGET RESERVES, AND INCREASING RESERVES TO BE ACTIVE IN BUDGET MANAGEMENT.

g) PRIMARY BUDGET UNITS SHALL DEVELOP A PLAN TO ALLOCATE REGULAR EXPENSES TO SUBORDINATE BUDGET USING UNITS, DETAILING TO THE TYPE AND ITEM OF THE STATE BUDGET (WITHOUT DETAILED ALLOCATION ACCORDING TO BUDGET GROUPS AND WITHOUT QUARTERLY ALLOCATION DURING THE YEAR); WHEREBY:

+ FOR UNITS FUNDED BY THE CENTRAL BUDGET, SPECIFICALLY ASSIGN THE SAVINGS OF 10% INCREASED AS REQUIRED TO IMPLEMENT THE SALARY REFORM.

+ FOR UNITS FUNDED BY THE LOCAL BUDGET, IMPLEMENT THE BUDGET ALLOCATION WITHOUT INCLUDING THE 10% INCREASED SAVINGS (EXCEPT FOR PUBLIC SERVICE UNITS OPERATING UNDER THE FINANCIAL MECHANISM AS PROVIDED IN GOVERNMENT DECREE NUMBER 43/2006/NĐ-CP ON APRIL 25, 2006, AND GOVERNMENT DECREE NUMBER 115/2005/NĐ-CP ON SEPTEMBER 5, 2005, AND GOVERNMENT DECREE NUMBER 130/2005/NĐ-CP ON OCTOBER 17, 2005).

As for state agencies implementing the self-management and self-responsibility mechanism for staffing and administrative management expenses under Decree No. 130/2005/NĐ-CP dated October 17, 2005 of the Government, the allocation and detailed budget assignment shall be divided into two parts: the part of the state budget expenditure detailed budget assigned to implement the self-management and self-responsibility regime; the part of the state budget expenditure detailed budget assigned not to implement the self-management and self-responsibility regime.

For public service units implementing financial self-management and self-responsibility according to Decree No. 43/2006/NĐ-CP dated April 25, 2006 of the Government, the allocation and detailed state budget revenue and expenditure assignment shall be based on the assigned tasks, classification of public service units, and the state budget expenditure detailed budget ensuring regular operations in the first year of the stabilization period approved by the competent authority (for public service units that self-fund part of their operational costs and those fully funded by the state budget). The detailed budget shall be divided into two parts: the part of the state budget expenditure detailed budget ensuring regular operations; the part of the detailed budget for non-regular activities.

3. Regarding the time for allocation and detailed budget assignment:

Based on the state budget revenue and expenditure detailed budget assigned by the competent authority, ministries and central agencies (for the central budget); People's Committees at all levels (for local budgets) shall submit to the respective-level People's Councils for decision on the state budget revenue detailed budget on the territory, local budget expenditure detailed budget, and the decision on allocating the detailed budget of their own level to assign the state budget revenue and expenditure detailed budget for each budget user unit before December 31, 2007, and organize the public disclosure of the state budget detailed budget in accordance with regulations. Among which, note the following points:

a) Provincial People's Committees shall base on the Prime Minister's decision on assigning state budget revenue and expenditure tasks, submit to the respective-level People's Councils for decision on the local budget revenue and expenditure detailed budget, provincial budget allocation plan, and the amount of supplementary funding from the provincial budget to lower-level budgets before December 10, 2007; and simultaneously base on the Provincial People's Council Resolution, implement the assignment of state budget revenue and expenditure tasks to each subordinate agency and unit within the province; revenue and expenditure tasks, percentage (%) distribution of revenue items to lower-level budgets, the amount of supplementary funding from the provincial budget to each district, county, town, and city under the province (if applicable).

Provincial People's Committees shall be responsible for reporting the results of local budget allocation and detailed budget assignment to the Ministry of Finance no later than five days after the respective-level People's Council decides on the state budget detailed budget in accordance with Article 40 of Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government detailing and guiding the implementation of the State Budget Law and Point 5.3 of Section 5 Part III of Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance; report the amount of capital mobilization in 2008 as stipulated in Clause 3, Article 8 of the State Budget Law, and the local government budget debt raised up to December 31, 2007 to the Ministry of Finance before January 31, 2008; report the balance of the Financial Reserve Fund as stipulated in Point 19.3 of Section 19 Part IV of Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance.

Specifically for the 2008 supplementary budget items, Provincial People's Committees shall report the results of the allocation and detailed budget assignment to various levels and budget user units in accordance with Circular No. 86/2006/TT-BTC dated June 23, 2006 of the Ministry of Finance on guiding the management of targeted supplementary funds from the central budget to the local budget.

- District People's Committees shall base on the decisions of the Provincial People's Committees on assigning state budget revenue and expenditure tasks, submit to the respective-level People's Councils for decision on the state budget revenue and expenditure detailed budget and district budget allocation plan before December 20, 2007; and simultaneously base on the District People's Council Resolution, assign state budget revenue and expenditure tasks to each subordinate agency and unit within the district, and the amount of supplementary funding from the district budget to each commune, ward, and town.

- Commune People's Committees shall base on the decisions of the District People's Committees on assigning state budget revenue and expenditure tasks, submit to the respective-level People's Councils for decision on the state budget revenue and expenditure detailed budget and commune budget allocation plan before December 31, 2007, and implement the allocation of regular expenditure detailed budget according to each type in the State Budget Manual, and simultaneously send a copy to the State Treasury where transactions take place as the basis for payment and expenditure control.

b) Based on the 2008 state budget revenue and expenditure detailed budget assigned by the Prime Minister and People's Committees, the primary budget units of the central and local budgets shall allocate and assign the state budget revenue and expenditure detailed budget to subordinate budget user units in accordance with the provisions 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. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance guiding the implementation of Decree No. 60/2003/NĐ-CP and additional guidance provided in this Circular (according to Model 1a, 1b, and 1c attached to this Circular), among which note the following points:

- Within seven working days from the date of receipt of the budget allocation plan, the financial agency must issue a notification on the result of the review. If more than seven working days have passed without the financial agency providing feedback, it shall be deemed to agree with the allocation plan submitted by the agency or unit. In case the financial agency agrees with the allocation plan, the head of the allocating agency or unit shall immediately allocate the budget to subordinate units using the budget, simultaneously sending the financial agency, State Treasury at the same level (according to forms 2a, 2b, and 2c attached to this Circular), and the State Treasury where transactions take place (sent through the detailed expenditure unit for the unit). In case the financial agency requests adjustments, within three working days from the date of receipt of the financial agency's document, the allocating agency or unit must adopt and adjust the plan and resubmit it to the financial agency for consensus; if there is no agreement on the adjustment content, report to the competent authority for consideration and decision in accordance with Point 1.5, Section 1, Part IV, Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance.

- For cases after December 31, 2007, due to difficulties and obstacles, the first-level budgetary unit has not completed the allocation of the assigned budget, the unit must report to the same-level financial agency for examination and permission to extend the budget allocation period. For reasons attributable to the unit, the budget allocation period may be extended until January 31, 2008; beyond this deadline, the financial agency will compile a report to the competent authority to reduce the allocated expenditure budget of the unit to reallocate to other agencies or units, or to supplement the contingency reserve according to the Government's regulations. For reasons beyond the control of the unit, such as lack of approval from the competent authority regarding organizational structure, implementation mechanisms, etc., the first-level budgetary unit must estimate the completion time for the financial agency to extend the allocation period, but no later than March 31, 2008; beyond this deadline, the remaining unallocated budget will be handled similarly to the above-mentioned subjective reasons.

- When allocating the budget to budget-using units, the first-level budgetary unit must pay attention to allocating funds to recover temporarily advanced or granted amounts; in case the unit does not allocate the budget for these recovery items, the financial agency will issue a notification to the relevant agencies and units to reallocate and simultaneously notify the State Treasury at the same level to temporarily refrain from disbursing funds until receiving the allocation document in accordance with the above regulations.

- In case the state budget and budget allocation plan have not been decided by the competent state agency in January 2008, the financial agency and State Treasury will temporarily provide funding for the expenditures of subordinate budget-using units according to Article 45 of Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government.

B. ORGANIZATIONAL MANAGEMENT AND CONTROL OF THE STATE BUDGET:

I. ON ORGANIZATIONAL MANAGEMENT OF BUDGET REVENUE:

1. People's Committees at all levels, Tax agencies, Customs and related agencies shall be responsible for:

- Organizing and implementing tax collection work from the beginning of the year, ensuring accurate, full, and timely collection according to the law.

- Implement the Law on Tax Administration and guiding documents of the Government and the Ministry of Finance effectively to enhance the effectiveness of tax revenue management.

- Review the land use situation in the locality to identify cases where land auction winners have not yet paid the land use fee, organizations and individuals currently using land but have not paid the land lease fee or property tax, etc.

- Collect fees and charges strictly in accordance with the law. Localities must seriously implement Directive No. 24/2007/CT-TTg dated November 1, 2007 of the Prime Minister on strengthening the enforcement of laws and policies related to fees and charges, and people's contributions. No fees or charges listed outside the Detailed List of Fees and Charges issued together with Decree No. 24/2006/NĐ-CP dated March 6, 2006 amending and supplementing certain articles of Decree No. 57/2002/NĐ-CP dated June 3, 2002 of the Government detailing the implementation of the Law on Fees and Charges shall be collected.

For fees and charges listed in the Detailed List of Fees and Charges but lacking guidance documents from the competent authority, they shall not be collected, nor shall similar rates of other fees and charges be applied.

2. Tax and Customs authorities must strengthen monitoring, inspection, and control of tax declarations by organizations and individuals; promptly detect incorrect or incomplete tax declarations and take corrective measures. At the same time, collect thoroughly all overdue tax debts that are recoverable from organizations and individuals engaged in production and business activities; compile reports to the competent authority for final resolution of unrecoverable tax arrears. Vigorously inspect and audit to fully recover tax revenues defrauded into the state budget. Regularly monitor and evaluate the impact of Vietnam's accession to the World Trade Organization on the production and business activities of regions and enterprises in the locality to study and propose timely amendments and supplements to policies and systems to ensure effective revenue management and achieve the state's revenue targets.

3. Strengthen management of public assets and land use from planning stages, establishing land records, issuing land use certificates, transferring land rights to ensure full and timely collection of revenues according to prescribed regulations, especially revenues from land auctions to prevent loss and waste of public assets.

II. ON MANAGEMENT AND CONTROL OF THE STATE BUDGET:

1. Organizing the execution of the state budget:

Ministries, central agencies, localities, and budget-using units must operate within their assigned budget limits; financial agencies and State Treasuries must organize budget execution within approved limits, strictly controlling expenditures in accordance with national standards, norms, and regulations. Notably:

- Expenditures funded from loans and aid must be disbursed and controlled according to the principle:

+ For expenditure budgets from foreign loan funds: Implement according to the assigned budget and the mechanism for domestic capital sources.

+ For expenditure budgets from foreign loan funds and aid under the method of recording revenue and expenditure in the state budget: Implement according to the actual disbursement progress of each project.

- Direct relevant agencies and units to coordinate with financial agencies to proactively plan to allocate funds for important projects right from the beginning of the year in accordance with the prescribed regulations, especially for building and repairing dyke and irrigation works, flood prevention, disease control, post-flood recovery, and relocation projects out of dangerous landslide areas as decided by competent authorities...

- Regularly organize inspections and evaluations of the implementation progress of projects; for projects not implemented according to schedule, timely decisions or reports to competent authorities for adjustment to transfer funds to projects with faster progress and potential for completion but insufficiently allocated funds must be made.

- In the 2008 regular expenditure budget assigned to Ministries and central agencies; the Ministry of Finance shall clearly inform the foreign currency expenditures so that units can proactively implement. For equivalent funds of 500,000 USD/year or more, the central budget will ensure foreign currency expenditures according to the assigned budget; for amounts less than 500,000 USD/year, Ministries and central agencies must proactively purchase foreign currency for implementation and arrange within the assigned state budget to handle exchange rate differences if they arise.

- For provinces and centrally-administered cities, if there is a need for urgent expenditures outside the budget but cannot be delayed and the contingency reserve fund is insufficient, they must rearrange expenditures within the assigned budget or use the Financial Reserve Fund to meet such urgent needs. The provincial People's Committee decides on using the provincial Financial Reserve Fund in accordance with Point d, Clause 3, Article 58 of Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government detailing and guiding the implementation of the State Budget Law. Provincial budgets may temporarily borrow from the central Financial Reserve Fund if the provincial Financial Reserve Fund has been exhausted. District and commune budgets may temporarily borrow from the provincial Financial Reserve Fund.

- In cases where local state budget revenues according to the allocation level do not reach the budget, the People's Committee shall develop a plan to reduce expenditures accordingly, focusing on cutting or postponing non-critical tasks and report to the Standing Committee of the People's Council at the same level for consideration and decision in accordance with the State Budget Law.

- Direct relevant agencies and units to coordinate with financial agencies to regularly inspect the organization and implementation of regulations and policies in units and grassroots levels. In cases where levels and units misuse the budget contrary to regulations and policies, especially those related to social policies, poverty reduction... timely measures must be taken to ensure that policies and regulations are correctly applied and effective.

- Report on the implementation of the state budget as prescribed.

2. On the implementation of funding distribution and payment, transferring funds to the following year:

a) For budget-using units:

Based on the assigned annual budget, budget-using units shall withdraw expenditure budgets according to the established budgetary expenditure standards and the progress and volume of task implementation; ensuring the principle:

- Personal payment items (salaries, salary supplements, social allowances...) shall be paid monthly according to the entitlements of the beneficiaries receiving salaries and allowances from the state budget. Ministries, central agencies, and provincial People's Committees shall direct and organize the payment of salaries through bank accounts for beneficiaries; the State Treasury shall closely cooperate with the State Bank and service providers to strictly implement the payment of salaries through bank accounts for beneficiaries from the state budget in accordance with Directive No. 20/2007/CT-TTg dated August 24, 2007 of the Prime Minister.

- Items with seasonal characteristics or only occurring at certain times such as basic construction investment, large-scale procurement and repairs, and other non-recurring items shall be paid according to the progress and volume of work carried out as prescribed.

b) Starting from the 2008 budget year, the form of cash payment orders shall be changed to withdrawing budgets at the State Treasury for the following tasks:

- Supplementary balance transfers from higher-level budgets to lower-level budgets: Based on the supplementary balance transfer budget from higher-level budgets to lower-level budgets assigned by competent authorities and the requirements for implementing tasks, lower-level financial agencies shall proactively withdraw budgets at the State Treasury of the same level to ensure their own budget balance; specifically, communal budgets shall withdraw at the district State Treasury. For supplementary balance transfers from the central budget to local budgets, the monthly withdrawal amount in principle shall not exceed 1/12 of the total annual supplementary balance; for the first quarter months, based on requirements and tasks, the monthly withdrawal amount may be higher than the average above, but the total withdrawal amount for the first quarter shall not exceed 30% of the annual budget. In cases where local budgets have been temporarily borrowed from the central budget, they must be recovered in the 2008 supplementary balance transfer budget, the Ministry of Finance shall notify the State Treasury to deduct the amount to be recovered immediately from the initial budget and the remaining portion evenly throughout the year for withdrawal. In special cases requiring increased withdrawal progress, the provincial People's Committee must submit a written request to the Ministry of Finance for consideration and decision.

For supplementary balance transfers from higher-level budgets to lower-level budgets in localities, based on revenue capacity and task requirements, the superior People's Committee shall stipulate the monthly withdrawal amount of the lower-level budget suitable to the local situation.

For supplementary funding with specific objectives from the central budget to local budgets according to the annual budget estimate, the transfer of funds shall still be carried out in accordance with Circular No. 86/2006/TT-BTC dated June 23, 2006, issued by the Ministry of Finance on guiding the management of supplementary funding with specific objectives from the central budget to local budgets.

Based on the budget withdrawal form of the financial agency (according to Form C2-05c/NS, C2-05d/NS attached), the State Treasury at the transaction location checks the conditions: included in the allocated budget estimate, within the monthly withdrawal limit, then records the expenditure from the higher-level budget and revenue from the lower-level budget according to the content of the supplementary expenditure and the State Budget Manual.

On a monthly basis, no later than the 15th day of the following month, the State Treasury (for the central budget) and the provincial and district State Treasuries (for the local budget) shall compile and report to the corresponding financial agencies (through the electronic information exchange system) on the results of withdrawing supplementary expenditure budget estimates for the previous month (according to Appendix No. 03 attached).

- Subsidies for newspapers and magazines assigned in the annual budget estimates of Ministries and Central Agencies: Based on the budget estimates granted by the competent authority and the progress of subsidized tasks, newspapers and magazines shall process the withdrawal of budget estimates at the State Treasury for payment in accordance with Circular No. 79/2003/TT-BTC dated August 13, 2003, issued by the Ministry of Finance on guiding the management, allocation, and payment of state budget expenditures through the State Treasury. Specifically, the provision of funds for certain types of newspapers and magazines in ethnic minority and mountainous areas and particularly difficult regions shall continue to be implemented as in 2007, based on Decision No. 975/QĐ-TTg dated July 20, 2006, of the Prime Minister.

- Training expenses for Lao and Cambodian students under aid expenditures: Based on the budget estimates granted by the competent authority and work requirements, units responsible for training Lao and Cambodian students shall process the withdrawal of budget estimates at the State Treasury for payment in accordance with Circular No. 79/2003/TT-BTC dated August 13, 2003, issued by the Ministry of Finance.

- Domestic debt repayment from the central budget: Based on the domestic debt repayment budget estimates granted by the competent authority and debt repayment commitments, the State Treasury shall deduct from the budget account to pay creditors when due, and record the domestic debt repayment.

c) In cases where it is necessary to adjust the budget estimates between subordinate budget-using units without changing the total amount and details according to each spending area, the first-level budget unit shall issue a decision to adjust the budget estimates between related budget-using units and send it to the relevant State Treasuries. For budget-using units that need to reduce their budget estimates, the State Treasury at the transaction location shall check the remaining budget balance before implementation, confirm the adjustment, and notify the first-level budget unit (fax copy) to inform other budget-using units of the increased budget estimates. For budget-using units that have increased budget estimates, the State Treasury at the transaction location shall verify and confirm the reduction in budget estimates of related budget-using units before increasing the budget estimates for these units.

When the first-level budget unit is assigned additional budget estimates by the competent authority to implement newly arising tasks, the first-level budget unit does not need to prepare a distribution plan for review by the financial agency but directly allocates the additional budget estimates to subordinate units and notifies the relevant State Treasuries to implement.

d) Regarding the handling of the surplus of the 2008 state budget to be carried over to the next year:

Ministries, Central Agencies, localities, and the State Treasury shall review, handle, and transfer the surplus of the 2008 state budget to the next year in accordance with the provisions of the State Budget Law, guiding documents of the Law, and Circular No. 101/2005/TT-BTC dated November 17, 2005, issued by the Ministry of Finance, ensuring strict and proper transfers, promoting efficient use of funds by budget-using units, and minimizing carryovers to the next year.

3. Practicing thrift, combating waste; preventing and combating corruption and implementing financial and state budget transparency:

- Ministries, Central Agencies, and localities shall organize and direct the full implementation of the provisions of the Anti-Corruption Law and the Law on Thrift and Combating Waste. At the same time, they shall promptly and fully address any violations discovered through inspection, audit, and investigation, clarify the responsibility of each organization and individual, and enforce accountability systems for heads of budget-using units when there is loss, waste, or improper use of the state budget.

- Ministries, Central Agencies, and localities shall direct and fully implement the provisions of Decision No. 192/2004/QĐ-TTg dated November 16, 2004, of the Prime Minister on the Financial Transparency Regulations for all levels of the state budget, budgetary units, organizations supported by the state budget, basic construction investment projects using the state budget, state-owned enterprises, funds sourced from the state budget, and funds from people's contributions, as well as Circulars guiding financial transparency issued by the Ministry of Finance, paying particular attention to:

+ Financial agencies at all levels shall implement the financial transparency system in accordance with Circular No. 03/2005/TT-BTC dated January 6, 2005, issued by the Ministry of Finance on guiding the implementation of financial transparency regulations for all levels of the state budget and the reporting system on the implementation of financial transparency, and Circular No. 54/2006/TT-BTC dated June 19, 2006, issued by the Ministry of Finance on guiding the Financial Transparency Regulations for direct support from the state budget to individuals and residents.

+ Budget-using units shall implement public disclosure in accordance with Circular No. 21/2005/TT-BTC dated March 22, 2005, issued by the Ministry of Finance on guiding the implementation of financial transparency regulations for budgetary units and organizations supported by the state budget.

State-owned enterprises shall implement transparency in accordance with the provisions set forth in Circular No. 29/2005/TT-BTC dated April 14, 2005, of the Ministry of Finance guiding the Financial Transparency Regulation for state-owned enterprises.

Agencies and units utilizing state budget funds shall implement transparency in accordance with the provisions set forth in Circular No. 10/2005/TT-BTC dated February 2, 2005, of the Ministry of Finance guiding the implementation of the Financial Transparency Regulation concerning the allocation, management, and utilization of construction investment capital from state budget funds.

Agencies and units entrusted with managing funds sourced from the state budget and funds from contributions by the people shall implement transparency in accordance with the guidance provided in Circular No. 19/2005/TT-BTC dated March 11, 2005, of the Ministry of Finance regarding financial transparency for funds sourced from the state budget and funds from contributions by the people.

To implement Decision No. 192/2004/QĐ-TTg dated November 16, 2004, of the Prime Minister, state budgets at all levels and budgetary units must report on the implementation of the transparency regulation at their respective localities and submit these reports to competent authorities for consolidation and evaluation nationwide in accordance with established regulations. Ministries, central agencies, and local governments (Provincial Departments of Finance) are requested to submit transparency reports to the Ministry of Finance immediately following the public disclosure of the 2008 local budget estimates and the 2006 local budget final accounts.

C. IMPLEMENTATION:

This Circular takes effect fifteen days after its publication in the Official Gazette and applies to the 2008 fiscal year; previous regulations that conflict with this Circular are no longer in effect. Ministries, central agencies, People's Committees of provinces and centrally-administered cities shall base their directives to subordinate agencies and lower-level local authorities on the provisions of this Circular to organize its implementation.

Any issues encountered during the implementation process should be promptly reported to the Ministry of Finance for coordination and resolution.