Circular 19/2004/QD-BTC providing guidelines on the issuance and payment of treasury bills and foreign currency bonds through the State Bank of Vietnam.

CIRCULAR No. 19/2004/TT-BTC OF MARCH 18, 2004 GUIDING THE TREASURY BILL AND FOREIGN-CURRENCY BOND BIDDING THROUGH VIETNAM STATE BANK

Pursuant to the Government’s Decree No. 141/2003/ND-CP of November 20, 2003 on the issuance of Government bonds, Government-underwritten bonds, and local administration bonds; after reaching an agreement with the Vietnam State Bank, the Ministry of Finance hereby guides the Treasury bill and foreign-currency bond bidding through the Vietnam State Bank as follows:

Chapter I. GENERAL PROVISIONS

Article 1. This Circular applies to the Vietnam State Bank, the Ministry of Finance, organizations and individuals involved in the bidding for Treasury bills and foreign-currency bonds through the Vietnam State Bank.

Article 2. Based on its tasks of mobilizing capital for the State budget and for development investment, the Ministry of Finance shall decide on the volume of Treasury bills and foreign-currency bonds to be issued annually. The State Treasury may take the initiative in deciding on the volume and time for each issuance, suitable to capital use demands and the situation of the financial and monetary markets.

Article 3. The Vietnam State Bank shall act as an agent for the Ministry of Finance in organizing bidding and payment of Treasury bills and foreign-currency bonds. The Vietnam State Bank shall be entitled to purchase the volumes of Treasury bills remaining after bidding sessions if the bidding participants have not yet bought them out.

Article 4. Treasury bills and foreign-currency bonds shall be traded on the monetary market or discounted, rediscounted, or pledged at the State Bank according to legal provisions.

Article 5. Interpretation of terms In this Circular, the terms below are construed as follows:

Point 5.1. Interest rate competition bidding means the offer of tendering interest rates by bidding participants for the Vietnam State Bank to select the winning bid interest rate.

Point 5.2. Interest rate non-competition bidding means the non-offer of tendering interest rate but instead the registration by bidding-participating organizations for the purchase of Treasury bills or foreign-currency bonds at the winning bid interest rate determined according to the results of interest rate competition bidding.

Point 5.3. Ceiling interest rate means the maximum interest rate of the issued Treasury bills or foreign-currency bonds announced by the Minister of Finance in each period.

Point 5.4. Sale of Treasury bills and foreign-currency bonds by mode of discount means the sale of such bills and bonds by the issuing organizations at prices below their par values and payment thereof at values equal to their par values upon their maturity.

Point 5.5. Sale of Treasury bills and foreign-currency bonds by mode of denomination parity means the sale of such bills and bonds at prices equal to their par values. Bill and bond interests shall be paid periodically or in lump sums together with the principal upon their maturity.

Chapter II. SPECIFIC PROVISIONS

Article 1. Issuance and payment currency

Clause 1. Treasury bills to be bid through the Vietnam State Bank shall be issued and paid in Vietnamese dong.

Clause 2. Foreign-currency bonds to be bid through the Vietnam State Bank shall be issued and paid in freely convertible foreign currencies. The issuance foreign currency shall be prescribed by the Minister of Finance for each issuance drive. Bonds already issued in a foreign currency shall have their principal and interest paid in such foreign currency. In cases where there are odd amounts in a bond payment sum (smaller than a currency unit), such amounts shall be converted into Vietnamese dong at the average exchange rate on the inter-bank foreign-currency market announced by

Article 2. Forms and par values of Treasury bills and foreign-currency bonds

Clause 1. Forms Treasury bills and foreign-currency bonds to be bid through the Vietnam State Bank shall be issued in forms of certificates or book entries; registered or bearer. a/ For the form of certificates: The Ministry of Finance shall prescribe their contents to be printed and distributed by the State Treasury to the winning bid organizations. b/ For the form of book entries: The Vietnam State Bank shall enter and manage books. Treasury bills and foreign-currency bonds shall take the form of book entries upon their issuance. Where bill or bond owners wish to receive bill or bond certificates, the Vietnam State Bank shall notify such to the State Treasury for granting of certificates.

Clause 2. Par values Par values of Treasury bills and foreign-currency bonds shall be announced by the Ministry of Finance (the State Treasury) for each issuance drive.

Article 3. Terms of Treasury bills and foreign-currency bonds

Clause 1. Treasury bills have different terms of 91 days, 182 days, 273 days, and 364 days.

Clause 2. Foreign-currency bonds have a term of one year or more. The Minister of Finance shall decide on the bond term for each issuance drive suitable to investment capital use demands of projects and the practical situation of financial and monetary markets.

Article 4. Interest rates of Treasury bills and foreign-currency bonds

Clause 1. The Minister of Finance shall announce the ceiling interest rate for each period. The General Director of the State Treasury shall decide on the specific interest rate for each bidding session within the permitted ceiling interest rate limit. Depending on specific conditions, the Minister of Finance may not prescribe the ceiling interest rate for organizing bidding.

Clause 2. Issuance interest rates of Treasury bills and foreign-currency bonds shall be determined based on the result of each bidding session.

4. 3. Interest rates for foreign-currency bonds may be fixed for the entire term of the bond or may be adjusted annually based on fluctuations in interest rates in the financial and monetary markets. In the case of applying floating interest rates, the Ministry of Finance (State Treasury) shall announce reference interest rates prior to the bidding process. The official interest rate shall be announced in advance for each period or at the time of interest payment on the basis of the reference interest rates at the time of announcement.

5. Principles of bidding

5. 1. All bidding information of tendering entities and information related to interest rates for organizing bidding shall be kept confidential.

5. 2. Bidding shall be conducted publicly, ensuring equality in rights and obligations among entities participating in the bidding.

5. 3. Entities winning the bid shall be required to purchase Treasury bills and/or foreign-currency bonds according to the announced winning volumes and interest rates.

6. Forms of bidding Bidding for Treasury bills and foreign-currency bonds shall be conducted in one of two forms: interest rate competitive bidding or a combination of interest rate competitive bidding and non-competitive bidding. In the case of applying the combined form of interest rate competitive bidding and non-competitive bidding, the volume of bills or bonds subject to non-competitive bidding must not exceed thirty percent of the total announced volume of bills or bonds to be issued for such bidding. The General Director of the State Treasury shall decide on the specific form of bidding for each bidding session.

7. Eligible subjects and conditions for participation in bidding

7. 1. Subjects eligible to participate in bidding Subjects eligible to participate in bidding for Treasury bills or foreign-currency bonds through the State Bank of Vietnam include: a/ Credit institutions operating under the Law on Credit; b/ Insurance companies, insurance funds, investment funds lawfully operating in Vietnam; branches of foreign investment funds in Vietnam. Organizations receiving funding allocated from the State budget must not use such funding to purchase Treasury bills or foreign-currency bonds.

7. 2. Conditions for participation in bidding a/ Having legal entity status, being lawfully established or operating under current Vietnamese laws; b/ Possessing the minimum legal capital of VND 20 billion (for organizations participating in Treasury bill bidding); c/ Having Vietnamese-dong accounts opened at banks (for organizations participating in Treasury bill bidding); having foreign-currency accounts opened at the State Bank's Transaction Bureau (for organizations participating in foreign-currency bond bidding); d/ Submitting applications for participation in the market for bidding of Treasury bills and/or foreign-currency bonds, which are accepted by the State Bank of Vietnam. Participation in foreign-currency bond bidding shall be limited to credit institutions operating under the Law on Credit Institutions in Vietnam and licensed by the State Bank of Vietnam for foreign exchange transactions. Annually, the State Bank of Vietnam shall review the conditions of subjects participating in bidding to grant new certificates of participants in Treasury bill and foreign-currency bond bidding or revoke previously granted ones.

8. Methods of selling Treasury bills and foreign-currency bonds Treasury bills and foreign-currency bonds bid through the State Bank of Vietnam shall be sold by two methods: face value and discount.

9. Organization of bidding for Treasury bills and foreign-currency bonds

9. 1. Timing for organizing bidding The Treasury bill and foreign-currency bond bidding shall be organized on a weekly, monthly, or quarterly basis, depending on the State budget's capital needs, the progress of project implementation, and the situation of financial and monetary markets.

9. 2. Announcement of bidding Two working days before the date of organizing bidding, based on requests for issuance of Treasury bills or foreign-currency bonds from the Ministry of Finance (State Treasury), the State Bank of Vietnam shall send issuance notices to bidding participants and announce them in the mass media. The notice contents include: volume of bills or bonds to be issued; bidding date; issuance date, maturity date; bidding method; forms of bills or bonds; methods of selling bills or bonds; principal and interest payment methods.

9. 3. Registration for bidding and bid opening a/ Procedures for bidding registration, the order for opening of bids, verification of the regularity and legality of tender tickets, as well as the bidding order and procedures, shall be prescribed by the State Bank of Vietnam. b/ The minimum tendering volume of Treasury bills shall be VND 100,000,000 (one hundred million dong). The minimum tendering volume of foreign-currency bonds shall be 10,000 currency units (ten thousand currency units) of the foreign currency issued.

9. 4. Determination of winning bid volumes and interest rates for Treasury bills and foreign-currency bonds

9. 4.1. Basis for determination The basis for determining winning bid volumes and interest rates for Treasury bills and foreign-currency bonds includes: - Volumes and interest rates tendered by bidding participating organizations. - Announced volumes of Treasury bills and foreign-currency bonds to be issued and the ceiling interest rate (if any).

9. 4.2. Principles for determination a/ For interest rate competition bidding - In the absence of a ceiling interest rate: The winning volume of Treasury bills or foreign-currency bonds shall be selected in ascending order from the lowest interest rate until the announced issuance volume of bills or bonds is reached. Where multiple bids are submitted at the same interest rate that exceeds the announced issuance volume, the excess winning volume (after deducting winning volumes at lower interest rates) shall be allocated proportionally to each bid based on the tendered volume of bills or bonds. - In the presence of a ceiling interest rate: The winning volume of Treasury bills or foreign-currency bonds shall be selected in ascending order of interest rates within the ceiling limit. If the tendered volume at the highest interest rate within the ceiling limit exceeds the announced issuance volume, the excess winning volume (after deducting winning volumes at lower interest rates) shall be allocated proportionally to each bid based on the tendered volume at such interest rate. In both cases, the highest winning interest rate shall be the common issuance interest rate applicable to all winning bidders. b/ For interest rate competition bidding combined with interest rate non-competition bidding - Determination of interest rate competition bidding volume and interest rate non-competition bidding volume: + When the interest rate non-competition tendering volume is less than or equal to 30% of the announced issuance volume of bills or foreign-currency bonds, the interest rate non-competition bidding volume shall be equal to the tendered volume. The interest rate competition bidding volume shall be equal to the announced issuance volume of bills or foreign-currency bonds minus the interest rate non-competition bidding volume. + When the interest rate non-competition tendering volume is greater than 30% of the announced issuance volume of bills or foreign-currency bonds, the volume of bills or foreign-currency bonds open to interest rate non-competition bidding shall be 30%, and the volume of bills and foreign-currency bonds open to interest rate competition bidding shall be 70% of the announced issuance volume of bills or foreign-currency bonds. - Determination of winning volumes and interest rates: + For interest rate competition bidding participants: Their winning volumes and interest rates shall be determined according to the provisions in Item a of this Section. + For interest rate non-competition bidding participants: Participants in interest rate non-competition bidding shall be entitled to purchase bills or foreign-currency bonds at the issuance interest rates applicable to interest rate competition bidders. When the interest rate non-competition tendering volume is greater than 30% of the announced issuance volume of bills or foreign-currency bonds, the volume of bills or foreign-currency bonds to be issued to such participants shall be allocated proportionally to their tendered volume. In cases where bidding participants do not fully purchase the volume of Treasury bills of a bidding session, the Vietnam State Bank shall have the right to purchase the remaining volume.

9. 5. Determination of sale prices of Treasury bills and foreign-currency bonds and amounts to be paid upon their maturity

9. 5.1. For Treasury bills a/ Sale of Treasury bills by denomination parity: - Sale prices of Treasury bills shall be equal to 100% of their face values. - The total amount (principal plus interest) payable upon maturity of Treasury bills shall be calculated using the following formula: n T = G + (G x Ls x ---) 365 In which: T: Total amount (principal + interest) payable upon maturity G: Sale price of Treasury bills Ls: Winning bill interest rate (calculated as percent/365 days) n: Number of days in the bill term b/ Sale of Treasury bills by discount: - Sale prices of bills shall be determined using the following formula: MG Ls x n 1 + ----- 365 In which: G: Sale price of Treasury bills MG: Face value of Treasury bills Ls: Winning bill interest rate (calculated as percent/365 days) n: Number of days in the bill term - Upon maturity, bills shall be paid at their face value. The Vietnam State Bank shall specify the method of rounding the prices of Treasury bills.

9. 5.2. Đối với trái phiếu ngoại tệ: a/ Bán trái phiếu theo phương thức tương đương mệnh giá: - Đối với trái phiếu trả gốc và lãi một lần khi đến hạn: + Giá bán trái phiếu bằng 100% mệnh giá của trái phiếu. + Tổng số tiền (gốc và lãi) phải trả khi đến hạn được tính theo công thức sau: T = MG x (1 + Ls)n Trong đó: T: Tổng số tiền (gốc và lãi) phải trả MG: Mệnh giá trái phiếu Ls: Lãi suất trúng thầu (%/năm) n: Thời hạn trái phiếu (năm) - Đối với trái phiếu trả lãi định kỳ: + Giá bán trái phiếu bằng 100% mệnh giá của trái phiếu. + Số tiền lãi định kỳ phải trả được tính theo công thức sau: L = MG x --- k Trong đó: L: Số tiền lãi định kỳ phải trả MG: Mệnh giá trái phiếu Ls: Lãi suất trúng thầu (%/năm) k: Số lần trả lãi trong một năm + Khi đến hạn, chủ sở hữu trái phiếu sẽ được trả gốc bằng mệnh giá và số tiền lãi của kỳ trả lãi cuối cùng. b/ Bán trái phiếu theo phương thức chiết khấu: - Giá bán trái phiếu được xác định theo công thức sau: MG (1 + Ls ) n Trong đó: G: Giá bán trái phiếu MG: Mệnh giá trái phiếu Ls: Lãi suất trúng thầu (%/năm) n: Thời hạn trái phiếu (năm) - Khi đến hạn, trái phiếu sẽ được trả bằng mệnh giá. Ngân hàng Nhà nước Việt Nam quy định phương pháp làm tròn giá của trái phiếu ngoại tệ.

9. 6. Thông báo kết quả đấu thầu Sau khi xác định lãi suất và khối lượng trúng thầu, Hội đồng đấu thầu trái phiếu kho bạc hoặc trái phiếu ngoại tệ sẽ ký và gửi tóm tắt kết quả đấu thầu cho Bộ trưởng Bộ Tài chính và Thống đốc Ngân hàng Nhà nước. Ngân hàng Nhà nước sẽ thông báo kết quả đấu thầu cho các đơn vị tham gia đấu thầu và công bố trên các phương tiện truyền thông đại chúng.

10. Việc thanh toán mua trái phiếu kho bạc hoặc trái phiếu ngoại tệ

10. 1. Ngày phát hành trái phiếu kho bạc hoặc trái phiếu ngoại tệ là ngày làm việc thứ hai sau ngày đấu thầu. Trong vòng hai ngày làm việc sau ngày đấu thầu, các đơn vị trúng thầu phải chuyển tiền để mua trái phiếu kho bạc hoặc trái phiếu ngoại tệ theo thông báo của Ngân hàng Nhà nước vào tài khoản của Kho bạc Nhà nước mở tại Ngân hàng Nhà nước. Ngân hàng Nhà nước sẽ ghi có số tiền thu từ việc bán trái phiếu kho bạc hoặc trái phiếu ngoại tệ vào tài khoản của Kho bạc Nhà nước và ghi có tài khoản trái phiếu kho bạc hoặc trái phiếu ngoại tệ cho các tổ chức trúng thầu. Trường hợp các tổ chức trúng thầu muốn nhận chứng chỉ trái phiếu hoặc trái phiếu, Ngân hàng Nhà nước Việt Nam sẽ thông báo cho Kho bạc Nhà nước cấp chứng chỉ.

10. 2. Trong trường hợp các đơn vị trúng thầu thực hiện thủ tục thanh toán muộn hơn thời hạn quy định, Ngân hàng Nhà nước sẽ trừ số tiền từ tài khoản gửi của các đơn vị trúng thầu hoặc yêu cầu ngân hàng nơi các đơn vị trúng thầu mở tài khoản thực hiện việc trừ tiền và chuyển vào tài khoản Kho bạc Nhà nước. Nếu số dư tài khoản gửi của các đơn vị trúng thầu không đủ để thanh toán, phần trúng thầu chưa thanh toán sẽ bị hủy bỏ và các đơn vị trúng thầu sẽ bị phạt bằng 5% số tiền bị hủy bỏ, số tiền phạt này sẽ nộp vào ngân sách nhà nước.

10. 3. Dựa trên các giấy đề nghị tín dụng của Phòng Giao dịch Ngân hàng Nhà nước, Kho bạc Nhà nước sẽ thực hiện thủ tục ghi nhận thu ngân sách trung ương hoặc hạch toán theo quy định của Bộ Tài chính.

11. Việc thanh toán trái phiếu kho bạc và trái phiếu ngoại tệ

11. 1. Việc thanh toán gốc và lãi trái phiếu kho bạc và trái phiếu ngoại tệ khi đến hạn a/ Việc thanh toán gốc và lãi trái phiếu kho bạc và trái phiếu ngoại tệ khi đến hạn sẽ được thực hiện thông qua Ngân hàng Nhà nước Việt Nam. Một ngày làm việc trước ngày đến hạn thanh toán gốc và lãi (đối với trái phiếu kho bạc) và hai ngày làm việc trước ngày đến hạn thanh toán gốc và lãi (đối với trái phiếu ngoại tệ), Bộ Tài chính sẽ thực hiện thủ tục chuyển số tiền đồng Việt Nam hoặc ngoại tệ sang Ngân hàng Nhà nước Việt Nam để thanh toán cho chủ sở hữu trái phiếu. Trong trường hợp thiếu ngoại tệ, Bộ Tài chính sẽ chuyển số tiền đồng Việt Nam để mua từ Ngân hàng Nhà nước Việt Nam số ngoại tệ cần thiết để thanh toán. Tỷ giá mua ngoại tệ sẽ là tỷ giá bình quân trên thị trường liên ngân hàng tại thời điểm mua. b/ Trên ngày đến hạn, nếu không nhận được chứng từ chuyển tiền của Kho bạc Nhà nước, Ngân hàng Nhà nước Việt Nam sẽ tự động trừ tiền từ tài khoản gửi của Kho bạc Nhà nước tại Phòng Giao dịch của mình để thanh toán cho chủ sở hữu trái phiếu kho bạc hoặc trái phiếu ngoại tệ. c/ Nếu ngày đến hạn thanh toán gốc và lãi trái phiếu kho bạc hoặc trái phiếu ngoại tệ rơi vào cuối tuần hoặc ngày nghỉ theo quy định, gốc và lãi trái phiếu sẽ được thanh toán vào ngày làm việc tiếp theo sau cuối tuần hoặc ngày nghỉ.

11. 2. Việc mua lại trái phiếu ngoại tệ chưa đến hạn Trong trường hợp cần thiết, Bộ Tài chính có thể mua lại trái phiếu ngoại tệ chưa đến hạn phù hợp với khả năng ngân sách nhà nước và mục tiêu chính sách tài chính quốc gia. Việc mua lại trái phiếu ngoại tệ chưa đến hạn sẽ được thực hiện theo các quyết định cụ thể của Bộ trưởng Bộ Tài chính và thông báo ít nhất hai ngày làm việc trước cho chủ sở hữu trái phiếu.

12. Chi phí phát hành và thanh toán

12. 1. All expenses for organizing bidding and paying Treasury bills or foreign-currency bonds shall be covered by the central budget and paid to the State Bank of Vietnam at a rate of 0.05% of the value of the winning Treasury bill or foreign-currency bond. Expenses for issuing and paying foreign-currency bonds shall be converted into Vietnamese dong for payment to the State Bank of Vietnam at the accounting exchange rate prescribed by the Ministry of Finance. The State Bank of Vietnam shall be entitled to use funds for bidding and paying Treasury bills and foreign-currency bonds for the following purposes: a/ Procurement of equipment for Treasury bill or foreign-currency bond bidding; b/ Regular maintenance and irregular repair expenses for machinery and equipment; c/ Expenses for designing and formulating software programs for Treasury bill or foreign-currency bond bidding; d/ Information and advertising expenses for Treasury bill or foreign-currency bond bidding on mass media; e/ Expenses directly related to each bidding session; f/ Expenses for seminars, surveys, and studies of experiences on Treasury bill or foreign-currency bond bidding; g/ Expenses for annual conferences of customers to review the organization of bidding; h/ Irregular and regular rewards for members of the bidding board and bidding staff and other relevant agencies. Such expenses must not exceed 10% of the total funds allocated for bidding and paying Treasury bills or foreign-currency bonds; i/ Expenses for meetings of the Treasury bill and/or foreign-currency bond bidding board; periodic preliminary reviews of the bidding situation and discussions of work directions; j/ Stationery expenses; k/ Other expenses in support of Treasury bill and/or foreign-currency bond bidding. Expenses for bidding and paying Treasury bills and/or foreign-currency bonds shall be accounted for as operational expenditures.

12. 2. Expenses for printing Treasury bills and foreign-currency bonds shall be covered by the central budget and paid to the organizations responsible for printing the bills and bonds.

13. Responsibilities of entities involved in bidding

13. 1. The Ministry of Finance and the State Bank of Vietnam a/ To inspect and supervise the organization of Treasury bill and foreign-currency bond bidding through the State Bank of Vietnam; b/ To resolve disputes and handle complaints arising during the process of bidding and paying Treasury bills or foreign-currency bonds through the State Bank of Vietnam; c/ The State Bank of Vietnam shall issue regulations detailing the guidance for Treasury bill and/or foreign-currency bond bidding through

13. 2. The Treasury bill and foreign-currency bond bidding board a/ The Treasury bill and foreign-currency bond bidding board shall be established by the Governor of the State Bank of Vietnam, consisting of three representatives from the Ministry of Finance (two from the State Treasury and one from the Department of Banking Finance); a/ Tasks of the Treasury bill and foreign-currency bond bidding board: - Inspect the conditions of participating units in the bidding; - Prepare necessary conditions for the organization of Treasury bill and/or foreign-currency bond bidding; - Supervise the opening of bids, determination of winning bid volumes, issuance prices, and interest rates of Treasury bills and foreign-currency bonds; - Approve bidding results and certify bidding result notifications; - Supervise the payment for the purchase of Treasury bills and/or foreign-currency bonds by winning bidders; - Monitor developments in the Treasury bill and foreign-currency bond bidding market, and propose measures to the Ministry of Finance and the State Bank of Vietnam for managing market operations.

Chapter III. ORGANIZATION OF IMPLEMENTATION

1. This Circular takes effect fifteen days after its publication in the

2. The ministers, the heads of ministerial-level agencies, the heads of government-attached agencies, the presidents of the provincial and centrally-administered city People's Committees, the General Director of the State Treasury, and the heads of relevant units shall strictly comply with the provisions of this Circular. FOR THE FINANCE MINISTER LE THI BANG TAM