Decision No. 19/2003/QD-NHNN on the issuance of internal management mechanisms within the State Bank of Vietnam to implement the ASEAN Swap Agreement

 

Pursuant to …; OF THE HEAD OF THE STATE BANK

Regarding the issuance of internal management mechanisms within the State Bank of Vietnam

to implement the ASEAN swap agreement

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GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated December 12, 1997;
Pursuant to Decree No. 86/2002/NĐ-CP dated November 5, 2002 of the Government stipulating the functions, tasks, powers, and organizational structure of Ministries and ministerial-level agencies;
To amend certain contents of the Regulation on the organization and implementation of tasks related to State foreign exchange reserves management issued pursuant to Decision No. 653/2001/QĐ-NHNN dated May 17, 2001 of the Governor of the State Bank of Vietnam as follows:
Pursuant to Decision No. 96/2002/QĐ-TTg dated July 18, 2002 of the Prime Minister on the mechanism for implementing the ASEAN Swap Agreement;
At the proposal of the Director of the Foreign Exchange Management Department,

DECISION:

Article 1. Attached hereto is the "Internal Management Mechanism within the State Bank of Vietnam to Implement the ASEAN Swap Agreement" issued pursuant to this Decision.

Article 2. This Decision shall take effect fifteen days from the date of signature.

Article 3. The Director of the Trading Department, the Directors of the Foreign Exchange Management Department, the Accounting and Finance Department, the Monetary Policy Department, the International Relations Department, and the Heads of other relevant units under the State Bank of Vietnam shall be responsible for implementing this Decision.

 

INTERNAL MANAGEMENT MECHANISM WITHIN THE STATE BANK OF VIETNAM TO IMPLEMENT THE ASEAN SWAP AGREEMENT
(Issued together with Decision No. 19/2003/QĐ-NHNN dated January 6, 2003)

of the Governor of the State Bank)

PART I
GENERAL PROVISIONS

Article 1This mechanism stipulates the procedures for organizing and implementing the ASEAN Swap Agreement within the State Bank of Vietnam in cases where Vietnam is the lending country, Vietnam is the borrowing country, and the designated bank is the agent bank.

Article 2. The Trading Department shall notify the fax or telex number of the Trading Department to the agent bank or participating members to serve as the point of contact for receiving and sending information related to transactions under the ASEAN Swap Agreement as specified in Chapters II, III, and IV of this Mechanism.

Article 3. The Foreign Exchange Management Department shall be responsible for coordinating with relevant Departments and Bureaus to regularly monitor the situation, promptly identify any issues or disputes arising between Vietnam and other ASEAN countries during the implementation of the ASEAN Swap Agreement, and report to the Governor for advice from the Prime Minister on handling such matters.

Article 4. The working hours stipulated in this mechanism are those established by the Governor of the State Bank of Vietnam.

Chapter II
PROCEDURE FOR IMPLEMENTATION WHEN VIETNAM IS THE LENDING COUNTRY

Article 5. Within two working hours from the time of receipt of a loan request or a request to increase the loan amount under the ASEAN Swap Agreement, the Trading Department shall send these requests to the Foreign Exchange Management Department.

Article 6. Upon receipt of the Trading Department's notification, the Foreign Exchange Management Department shall base its decision on the previous month's international reserve level (as reported to the International Monetary Fund) and the implementation status of IMF programs to submit to the Governor for approval:

1. Whether Vietnam will participate fully, partially, or not at all in the lending.

2. Whether Vietnam will increase or not increase the loan amount (in case the agent bank requests).

3. The amount and type of foreign currency to be lent if the decision is to lend.

4. The source of foreign currency to be used for lending if the decision is to lend.

The above decisions must be made no later than 10:00 AM on the second working day following the receipt of the loan request or the request to increase the loan amount.

Article 7.

1. Within one working hour from the time of receipt of the Governor's opinion, the Foreign Exchange Management Department shall notify the Trading Department of the Governor's decision regarding whether Vietnam will lend fully, partially, or not at all, and whether to increase or not increase the loan amount.

2. Within three working hours from the time of receipt of the notification from the Foreign Exchange Management Department, the Trading Department shall notify the agent bank of the contents specified in the Memorandum of Understanding on the swap agreement, including: full or partial lending or no lending, the amount and type of currency to be lent, and whether to increase or not increase the loan amount.

3. Within two working hours from the time of receipt of the formal confirmation from the agent bank regarding the swap transaction, the Trading Department shall confirm the details of the swap transaction with the agent bank via telex or fax.

4. The Trading Department shall proceed with the necessary procedures to execute the swap transaction on the agreed execution date with the agent bank. Immediately after executing the transaction, the Trading Department shall notify the results of the transaction to the Foreign Exchange Management Department.

5. After receiving the Trading Department's notification about the transaction results, the Foreign Exchange Management Department shall draft a report for the Governor's approval to be submitted to the Prime Minister, while simultaneously sending copies to the Ministry of Finance, the Ministry of Planning and Investment, and the Ministry of Trade.

6. Upon maturity, the Trading Department shall carry out the procedures to reclaim the principal and interest of the foreign currency loan, return the foreign exchange reserves used for lending to the state foreign exchange reserve, record according to current regulations, and notify the results to the Foreign Exchange Management Department. Based on the Trading Department's notification, the Foreign Exchange Management Department shall draft a report for the Governor's approval to be submitted to the Prime Minister, while simultaneously sending copies to the Ministry of Finance, the Ministry of Planning and Investment, and the Ministry of Trade.

Article 8. The procedure for requests to extend swap transactions shall be carried out in accordance with the Memorandum of Understanding on Swap Agreements of ASEAN and according to a similar process to the new loan application procedures stipulated in this Mechanism.

Chapter III
PROCEDURE WHEN VIETNAM IS THE BORROWER

Article 9. When there is a severe deficit in the balance of payments, the economy faces a loss of international payment capability, or in other emergency situations, the Department of Foreign Exchange Management shall take the lead in coordinating with relevant Departments and Bureaus within the State Bank to advise the Governor on developing a borrowing plan under the ASEAN Swap Agreement and seek opinions from the Ministry of Finance, the Ministry of Planning and Investment, and the Ministry of Trade to submit the borrowing plan for approval by the Prime Minister. The contents of the borrowing plan include:

1. The amount of the loan denominated in US dollars.

2. The plan for using the borrowed funds and repaying the loan.

3. The projected balance of Vietnamese dong sources to be utilized.

Article 10. Based on the approved borrowing plan by the Prime Minister, the Department of Foreign Exchange Management shall coordinate with the Department of Monetary Policy to draft a borrowing request document along with an assessment of the national economic situation and the outlook for the balance of payments to be submitted to the Governor for decision. The contents of the borrowing request document include:

1. The amount of the swap transaction denominated in US dollars.

2. The term of the transaction.

3. The date of the transaction (at least seven working days after the request is made).

Article 11.

1. Within one hour of receiving the Governor's opinion, the Department of Foreign Exchange Management shall notify the Trading Department of the Governor's decision regarding Vietnam's borrowing request and the assessment of the national economic situation and the balance of payments outlook of Vietnam.

2. On the same day it receives the notification from the Department of Foreign Exchange Management, the Trading Department shall send the borrowing request and the assessment of the national economic situation and the balance of payments outlook of Vietnam to the Agent Bank.

3. At the same time, the Trading Department shall notify participating member countries of Vietnam's holiday schedule during the period when the transaction can be executed.

Article 12. Two working days before the confirmed transaction date, the Trading Department shall notify the Agent Bank via Telex or Fax of the spot exchange rate and the transaction execution procedures.

Article 13. The spot exchange rate of the Vietnamese dong against the US dollar, EURO, and Japanese yen is the average midpoint between the buying and selling rates of the Vietnamese dong against the US dollar, EURO, and Japanese yen applied by the Trading Department on the day of sending the notification.

Article 14. On the same day it receives the official confirmation of the swap agreement content from the Agent Bank, the Trading Department shall reconfirm the content of the swap agreement with the Agent Bank via Telex or Fax.

Article 15.

1. The foreign currency borrowed under the ASEAN Swap Agreement will be credited to the foreign exchange reserve fund managed by the State Bank and used according to the plan approved by the Prime Minister.

2. The corresponding amount in Vietnamese dong will be credited to the Vietnamese dong account of each participating member country opened at the State Bank of Vietnam.

Article 16. After completing the transaction, the Trading Department shall notify the Department of Foreign Exchange Management of the transaction results. Upon receipt of the Trading Department's notification, the Department of Foreign Exchange Management shall draft a report on the results to be reviewed by the Governor and submitted to the Prime Minister, while simultaneously sending copies to the Ministry of Finance, the Ministry of Planning and Investment, and the Ministry of Trade.

Article 17.

1. Based on the repayment plan approved by the Prime Minister, when the repayment due date arrives, the Trading Department shall fulfill the repayment obligation according to the provisions of the swap agreement and notify the Department of Foreign Exchange Management.

2. After completing Vietnam's repayment obligation, the Department of Foreign Exchange Management shall draft a report to be reviewed by the Governor and submitted to the Prime Minister, while simultaneously sending copies to the Ministry of Finance, the Ministry of Planning and Investment, and the Ministry of Trade.

Article 18. Requests for extending the loan shall be carried out in accordance with the provisions in the Memorandum of Understanding on the ASEAN Swap Agreement and according to a similar process to the new loan application procedures stipulated in this mechanism.

Chapter IV
PROCEDURE WHEN THE STATE BANK OF VIETNAM IS DESIGNATED AS

THE AGENT BANK

Article 19. When it is the turn or there is a request for the State Bank of Vietnam to perform the role of the Agent Bank, the Trading Department shall present to the Governor for a decision on accepting the role of the Agent Bank.

Article 20. In case the State Bank cannot perform the role of the Agent Bank, the Trading Department shall notify and arrange with subsequent participating members to replace and perform the role of the Agent Bank.

Article 21If the State Bank performs the role of the Agent Bank, the Trading Department shall be responsible for:

1. Coordinating the implementation and extension of swap transactions according to the operational procedures specified in Articles 15 and 16 of the Memorandum of Understanding on the ASEAN Swap Agreement.

2. Notifying the remaining amount of the agreement when each participating member requests it.

3. Serving as the point of contact to coordinate with the Department of International Relations to organize consultations among participating members to resolve disputes or disagreements arising from the implementation of the agreement in good faith, as stipulated in Article 17 of the Memorandum of Understanding on the ASEAN Swap Agreement.

4. Serving as the point of contact to coordinate with the Department of International Relations to perform the role of the Agent Bank in amending and extending the agreement according to the provisions in Articles 18 and 19 of the Memorandum of Understanding on the ASEAN Swap Agreement.

Chapter V
PROCEDURE WHEN AMENDING OR EXTENDING THE ASEAN SWAP AGREEMENT

Article 22When Vietnam proposes to amend the ASEAN Swap Agreement, the Department of International Relations shall be responsible for:

1. Serving as the point of contact to coordinate with relevant Departments and Bureaus to compile amendment suggestions and supplementary clauses in the Memorandum of Understanding on the ASEAN Swap Agreement to be submitted to the Governor for decision and sent to the Agent Bank.

2. Serving as the point of contact to coordinate with relevant Departments and Bureaus to monitor and participate in the review and amendment process of the proposals mentioned in Clause 1 of this Article.

Article 23When other participating member countries propose amendments to the ASEAN Swap Agreement, the Department of International Relations shall serve as the point of contact to coordinate with relevant Departments and Bureaus to participate in the review and amendment process through the Agent Bank.

Article 24. When there is a request for consultation on the extension of the ASEAN Swap Agreement, the International Relations Department is responsible for submitting to the Governor regarding the extension of the ASEAN Swap Agreement.

Chapter VI
ACCOUNTING FOR TRANSACTIONS RELATED TO THE ASEAN SWAP AGREEMENT

Article 25. The Financial Accounting Department is responsible for:

1. Guiding the accounting for lending and borrowing transactions of the State Bank related to the implementation of the ASEAN Swap Agreement.

2. Guiding the accounting for costs and revenues related to the implementation of the ASEAN Swap Agreement.

Article 26. The Trading Department shall coordinate with the Financial Accounting Department to account for foreign currency and Vietnamese dong borrowing and lending transactions corresponding when participating in swap transactions as prescribed in this mechanism.

Article 27. The Trading Department shall open Vietnamese dong accounts for each country participating in lending and open corresponding foreign currency accounts in member countries when necessary to account for swap transactions as stipulated in the memorandum of the ASEAN Swap Agreement.

Chapter VII
PROVISIONS ON INFORMATION SECURITY

Article 28All information, data, and documents related to the memorandum of the ASEAN Swap Agreement, parties involved in ASEAN swap transactions; Vietnam's borrowing and lending transactions under the ASEAN Swap Agreement shall be kept confidential.

Information, data, and documents related to the funds supplied in Vietnam's borrowing transactions under the ASEAN Swap Agreement shall be kept top secret.

Chapter VIII
IMPLEMENTING PROVISIONS

Article 29. Any amendment or supplement to this mechanism shall be decided by the Governor of the State Bank.

                                                                    EXECUTED AT THE REQUEST OF THE DEPUTY GOVERNOR

                                                                   DEPUTY GOVERNOR

                                                                   (Signed)

                                                           

                                                                   Phùng Khắc Kế