Circular No. 193/2011/TT-BTC guiding the financial management and disbursement for programs and projects funded by the OFID International Development Fund (OFID).

 CIRCULAR

Guidelines on financial management and disbursement for programs and projects funded by the OPEC Fund for International Development (OFID)

Pursuant to the State Budget Law No. 01/2002/QH11 dated December 16, 2002, and the Public Debt Management Law No. 29/2009/QH12 dated June 17, 2009;

Pursuant to the Decree No. 79/2010/NĐ-CP dated July 14, 2010 on public debt management operations;

Pursuant to the Decree No. 78/2010/NĐ-CP dated July 14, 2010 on relending government foreign loans;

Pursuant to the Decree No. 60/2003/NĐ-CP dated June 6, 2003 detailing and guiding the implementation of the State Budget Law;

Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government on the functions, powers, and organizational structure of the Ministry of Finance;

The Ministry of Finance hereby guides the financial management and disbursement for programs and projects funded by the OPEC Fund for International Development (OFID) as follows:

Part I

GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

2. Applicability:

This Circular stipulates the financial management, withdrawal of funds for payment, inspection, reporting, settlement, and budget accounting applicable to programs and projects funded by OFID.

第二条 组织和实施奖励工作的支出水平，如政府第152/2025/NĐ-CP号决定关于分级授权和奖励领域的分权规定

Agencies, organizations, and individuals involved in managing and implementing programs and projects using government loans from the OPEC Fund for International Development (OFID) are subject to the provisions of this Circular.

Article 2: Definitions

1. The OPEC Fund for International Development (OFID) (hereinafter referred to as OFID): is an organization providing development support funding from the OPEC Fund for International Development.

2. Loan Agreement: is the agreement signed between the Socialist Republic of Vietnam and OFID to finance projects and investment programs for development in Vietnam.

Article 3. General Principles

1. The OFID loan capital for projects is a foreign loan of the Government. This capital is managed in accordance with the Public Debt Management Law, the State Budget Law, guiding documents of these Laws, regulations on Official Development Assistance (ODA) fund management, and the provisions of this Circular.

2. Projects using OFID loan capital that fall under the budget allocation category include infrastructure, public welfare projects, and other projects without direct repayment capability, which are budgetary expenditures according to the current State Budget Law, including cases where local budgets borrow central government foreign loans to allocate to projects, and allocate from ODA funds according to the budget allocation mechanism.

Counterpart funds for projects under budget allocation are guaranteed by the State Budget (central and local), allocated in the annual state budget estimate according to construction or administrative and public service funds corresponding to the project's expenditure items.

3. Projects using OFID loan capital that fall under full or partial relending include projects capable of fully or partially recovering capital, including credit projects that will apply full or partial relending mechanisms, and partial ODA fund allocations based on the project's repayment capacity.

The conditions for relending specific ODA funds (for full or partial relending of ODA funds, the borrower for relending, currency for relending, amount of relending, term of relending, interest rate for relending, fees as prescribed by the financier, domestic relending fees, etc.) shall be determined during the project preparation, appraisal, and approval process based on the provisions of Decree No. 78/CP-NĐ dated July 14, 2010 on relending of foreign loans provided by the Government and/or agreements with financiers.

4. Domestic counterpart funds:

a. The domestic counterpart funds are the contributions from Vietnam in the project funded by OFID to cover the contents of the project including funds to pay taxes, withdrawal fees, bank fees, insurance fees, transportation fees, storage fees, auditing costs, and other legitimate costs if these costs are not covered by foreign loan funds according to the Loan Agreement.

b. The domestic counterpart funds of the project under the State budget allocation for the project's expenditure responsibility at the relevant budget level shall be allocated by that budget; the counterpart funds of the project for full or partial relending shall be guaranteed by the project borrower. The project borrower must allocate or request the competent authority to fully allocate the domestic counterpart funds for the project to ensure its effectiveness and balance with the disbursement progress of foreign funds.

5. The project management agency and the project borrower are responsible under the law for implementing projects in accordance with the commitments stipulated in the Loan Agreement and are responsible for organizing the management of the use of funds for their intended purposes and effectively according to the Loan Agreement and domestic regulations on project investment construction management, ODA fund management and utilization, project asset management, and final settlement upon completion of the project in accordance with current regulations.

Article 4. Bank Services and Project Accounts

1. The bank service provider is a commercial bank selected from a list of qualified commercial banks authorized to conduct foreign transactions, payments, and provide banking services, chosen by the Ministry of Finance or jointly with the project borrower.

2. Responsibilities of the bank service provider:

a. At the request of the Ministry of Finance, the bank service provider opens a Temporary Advance Account (hereinafter referred to as TKTƯ) for the project to facilitate transactions in receiving funds disbursed by OFID and transferring funds from the TKTƯ to the project's source account opened at the State Treasury in accordance with current regulations.

b. The bank service provider is responsible for providing sufficient information to the Ministry of Finance and the project management board to facilitate domestic and international payment transactions through the banking system.

c. The bank service provider credits the TKTƯ of the project with the amount disbursed by the financier within two working days after receiving the credit notice from OFID and informs the Ministry of Finance and the project borrower of the received amount.

d. Within two working days after executing the transfer order from the account holder, the bank service provider sends the account holder related debit notices including the amount of foreign currency, the amount in Vietnamese Dong, exchange rate, date of payment, beneficiary for national budget accounting purposes.

đ. The balance on the TKTƯ earns interest at the rate specified by the bank service provider or agreed between the bank service provider and the account holder. The bank service provider opens a separate account to track interest generated from the TKTƯ. The balance on this tracking account also earns interest.

e. The project bank service provider is entitled to service fees according to the current fee schedule of the bank service provider.

g. On a monthly basis and upon request, the bank service provider is responsible for sending the account holder statements of the TKTƯ balances, accrued interest from the TKTƯ of the projects, service fees collected by the bank service provider, the difference between interest and fees, beginning and ending balances.

3. Project Accounts

a. Accounts at the bank service provider:

- Based on the project's payment needs and the project management agency's request to open a TKTƯ for the project, the Ministry of Finance will send a letter requesting OFID to approve the use of the TKTƯ for the project. OFID will review and notify whether it approves or rejects the opening of the TKTƯ for the project.

- Based on OFID's approval, the Ministry of Finance will open the TKTƯ at the bank service provider according to the project's payment requirements in compliance with the Loan Agreement and agreements with the financier, and current domestic regulations. The TKTƯ serves as an intermediary account to transfer funds to the project's source account opened by the project management board at the provincial/state treasury.

b. Accounts at the State Treasury System (hereinafter referred to as KBNN):

- Source account to receive OFID funds: Depending on the organizational implementation requirements of the project and written agreements with the financier, the project borrower opens a source account at the KBNN system to receive OFID loan funds transferred from the project's TKTƯ, and to make payments after treasury expenditure control. According to the project design, subordinate management agencies (districts, communes) may open deposit accounts at the district treasury to receive funds transferred from the provincial project management board for project activities.

- Counterpart account for counterpart funds: The project borrower opens an account at the KBNN system to receive and pay counterpart funds allocated by the budget according to current regulations.

4. Banking Service Fees

Banking service fees are paid from the interest generated on the TKTƯ and recorded as part of the project's total expenses. Interest generated on accounts under the project allocation is revenue for the state budget. For mixed projects where both government-funded components and relended ODA components share the same TKTƯ (the time of relending is the time of withdrawing funds from the TKTƯ), the interest generated on the account is revenue for the state budget. Upon project completion, unused accrued interest must be remitted to the state budget. If the accrued interest is insufficient to cover banking service fees, the project borrower receiving government allocations can plan to request counterpart funds to settle the fees; the relending project borrower settles the fees using their own funds.

5. Exchange Rate Conversion

The conversion of OFID capital from foreign currency to Vietnamese Dong shall be applied at the transfer purchase rate of the Bank serving at the time of transaction.

Part II

SPECIFIC PROVISIONS

Article 5. Management and use of loan capital

1. The loan capital provided by OFID for investment items in the project shall be in accordance with the ratio specified in Appendix 2 of the Loan Agreement signed with OFID.

2. The financing ratio stipulated in the Loan Agreement is calculated based on the cost of investment items excluding tax costs. This ratio may change according to the agreement between the financier and the borrower. Each withdrawal of loan capital for payment of investment items shall apply corresponding financing ratios to determine the amount withdrawn from the loan capital.

3. All withdrawals from the loan capital must be completed before the loan account closing date (or the extended loan account closing date) as prescribed in the Loan Agreement.

4. Loan capital shall not be used to pay for goods items not specified in the Loan Agreement.

5. The repayment of foreign loan capital for projects shall be carried out in accordance with the current regulations of the State, the provisions of the Loan Agreement, and the guiding documents of the Ministry of Finance on management and payment of investment construction capital and financial management regulations for ODA funds, including this Circular.

Article 6. Method of withdrawing foreign capital

Valid project expenses payable from OFID loan capital shall be processed through direct payment; reimbursement/retrospective payment; and payment through the Advance Account (TKTA).

Withdrawal documentation, expenditure control procedures, and OFID loan capital payment, counterpart capital for projects funded by OFID shall be implemented in accordance with Circular No. 108/2007/TT-BTC dated September 7, 2007, issued by the Ministry of Finance guiding the financial management mechanism for official development assistance (ODA) programs and projects, Circular No. 40/2011/TT-BTC dated March 22, 2011, amending and supplementing certain points of Circular No. 108/2007/TT-BTC, and Circular No. 107/2011/TT-BTC dated July 20, 2011, amending point c, Clause 2, Article 1 of Circular No. 40/2011/TT-BTC dated March 22, 2007, issued by the Ministry of Finance regarding guidance on the financial management mechanism for official development assistance (ODA) programs and projects.

Project sponsors shall comply with the sponsor's guidelines on the method of withdrawing capital and withdrawal forms in the OFID disbursement guide.

1. Direct Payment:

Direct payment is a form of payment where, upon the Borrower's request, OFID will directly transfer payment to the contractor/supplier of goods/services.

When there is a need to withdraw capital for direct payment, the Project Management Board sends the following documents to the Ministry of Finance (Debt Management and External Financial Affairs Department):

- A letter requesting capital withdrawal accompanied by the Withdrawal Form, statements according to the model, and necessary supporting documents as required by OFID;

- Invoice/payment request from the contractor/supplier of goods/services.

- Payment request form with confirmation (original) from the expenditure control agency.

Within five working days from receiving complete valid documents, the Ministry of Finance (Debt Management and External Financial Affairs Department) will review and co-sign the Withdrawal Form sent to OFID. If OFID approves, the money will be directly transferred into the contractor/supplier's account.

2. Reimbursement/Retroactive Payment:

Reimbursement payment is a form of payment that reimburses the amount paid by the implementing agency from its own capital for eligible expenditures financed by the loan.

Retroactive payment is a form of payment where OFID finances eligible project expenditures that occurred prior to the effective date of the Project and were paid by the Borrower from its own capital. The content of the payment and the retroactive payment period are defined in the Loan Agreement.

When there is a need to withdraw capital for reimbursement, the Project Management Board sends the following documents to the Ministry of Finance (Debt Management and External Financial Affairs Department):

- A letter requesting capital withdrawal accompanied by the Withdrawal Form and statements according to the model, and necessary supporting documents as required by OFID. The Withdrawal Form must clearly state the name and account number of the unit that has advanced the capital.

- Invoice/payment request from the contractor/supplier of goods/services.

- Payment request form with confirmation from the expenditure control agency (original).

- The Project Management Board provides additional documents proving the transfer of funds to the contractor.

- In special cases, the Ministry of Finance may require additional explanatory documents.

Within five working days from receiving complete valid documents, the Ministry of Finance (Debt Management and External Financial Affairs Department) will review and co-sign the Withdrawal Form sent to OFID. If OFID approves, the money will be returned to the Project Management Board for the capital already used.

3. First Withdrawal to the Advance Account (TKTA):

The first withdrawal to the TKTA shall be based on the approved limit of the TKTA by OFID in the letter sent to the Ministry of Finance.

To withdraw capital, the Project Management Board sends the Ministry of Finance (Debt Management and External Financial Affairs Department) a letter requesting capital withdrawal, the Withdrawal Form, and the statement of withdrawal, along with the project's monthly or quarterly capital usage plan.

Within five working days from receiving complete valid documents, based on OFID's approval letter regarding the use of the TKTA, the Ministry of Finance (Debt Management and External Financial Affairs Department) will review and sign the Withdrawal Form sent to OFID.

4. Additional Withdrawal to the Advance Account (TKTA):

To withdraw additional capital to the TKTA, the Project Management Board sends the following documents to the Ministry of Finance (Debt Management and External Financial Affairs Department):

- A letter requesting additional TKTA withdrawal.

- An expenditure statement prepared by the Project Management Board according to OFID's model showing each expenditure item from the TKTA in detail: payment date, original currency amount, US dollar equivalent amount, USD/VND exchange rate, payment content, beneficiary, financing ratio, contract value. This statement serves as the basis for the Ministry of Finance to record income and expenditure.

- Investment payment request form with confirmation from the Treasury (original and English translation), investment withdrawal form (original and English translation). Each investment payment request form with confirmation can only be used once.

- Signed Contracts (Vietnamese and English translation). Contracts are only submitted once.

- Other documents as prescribed by the financier (to be sent only once if a payment contract is made in multiple installments): including the contract, decision approving the tender results, invoice, performance guarantee, advance payment guarantee (in case of provisional advances) or other documents as required by the financier.

- Documentation and certificates to be submitted to the Ministry of Finance: in addition to the certificates prescribed by OFID, the Project Management Board shall prepare detailed statements showing each expenditure from the account of the source funds, with confirmation from the State Treasury Office where transactions take place (original copy) to be submitted to the Ministry of Finance. The statement must detail expenditures according to the date of payment, amount, purpose of payment, beneficiary, number/date of the expenditure certificate.

Within five working days from the date of receipt of complete and valid documents, the Ministry of Finance (Department of Debt Management and External Financial Affairs) will examine and sign the Withdrawal Request Form to be sent to the financier for review. If the financier accepts, additional funds will be transferred to the Central Special Account.

5. Withdrawal of funds from the Central Special Account to the source fund account at the State Treasury Office:

OFID loan funds will be withdrawn to the Central Special Account of each project opened at the bank designated by the Ministry of Finance as the main account holder. To withdraw funds from the Central Special Account to the source fund account at the State Treasury Office, the Project Management Board shall submit to the Ministry of Finance (Department of Debt Management and External Financial Affairs) the following documents:

- A letter requesting withdrawal of funds to the source account, clearly specifying the amount requested, account number, and location of the account opening.

- Budget for the requested withdrawal amount. Annually, the Project Management Board shall prepare and submit to the competent authority/provincial People's Committee for approval the annual financial plan of the project (the financial plan needs to be detailed by quarter, by major activities of the project, sources of funding, cost items, and the proportion of funding from various sources for each cost item). The approved financial plan shall be sent to the Ministry of Finance as the basis for transferring funds in batches to the Project Management Board's source fund account opened at the provincial State Treasury Office; and sent to the provincial Department of Finance and the competent authority as the basis for monitoring and accounting of foreign funds allocated to the province.

- Any other necessary documents.

Within three working days, based on the examination of the next disbursement requirements of the project, the remaining/provisional excess/shortage of funds, and the balance on the Central Special Account of the project, the Ministry of Finance will transfer funds from the Central Special Account to the project's source fund account; or notify the Project Management Board to apply direct payment methods if necessary.

6. Expenditure from the Source Fund Account:

Expenditures from the source fund account shall be carried out according to the pre-payment control process. The pre-payment control process is a procedure whereby all payments from the source fund account must be controlled by the State Treasury Office/lending agency before making payments according to current regulations.

In cases where projects have accounts opened for local levels (districts, communes), the provincial Project Management Board shall base on the project design, agreement in the Loan Agreement, and current regulations to handle provisional advances for districts and communes.

Any surplus funds in the final transfer batch to the project that are not used (if any) will be returned to the project's Central Special Account to be repaid to the foreign side.

Article 7. National Budget Accounting of OFID Funds

1. Specific procedures for implementing national budget accounting in accordance with current regulations stipulated in Circular No. 107/2008/TT-BTC dated November 18, 2008, guiding supplementary provisions on national budget management and operation, Decision No. 19/2007/QĐ-BTC dated March 27, 2007 issued by the Minister of Finance on the accounting rules for recording receipts and expenditures of government loans and foreign aid, and Decision No. 2752/QĐ-BTC dated November 6, 2009 issued by the Ministry of Finance on the rules for recording and accounting of government loans, aid, and foreign debt repayment under the TABMIS operational conditions.

2. National budget accounting procedures:

a. In the case of payment through the Central Special Account:

For grant-funded projects, based on the expenditure statement from the source fund account, the Ministry of Finance will prepare a notice to record the receipt and expenditure of OFID loan funds withdrawn and granted to the project. OFID loan funds granted to the project will be recorded as foreign loan receipts and central budget supplementary expenditures for the provincial budget or recorded as grants for basic construction investment for the competent authority.

For projects receiving relending of OFID loan funds, based on the transfer documents from the Central Special Account to the source fund account, the Ministry of Finance will prepare a notice to record the receipt and expenditure of OFID loan funds withdrawn and relended to the project for the lending agency to record the relending to the project.

When the project ends, any surplus funds from the last capital transfer to the source fund account (if any) will be returned to the project's Central Special Account and recorded as a reduction in provincial and central budget receipts and expenditures.

b. In the case of direct payment/reimbursement:

Based on the OFID disbursement notification, the Ministry of Finance will prepare a notice to record the receipt and expenditure of OFID loan funds withdrawn through direct payment/reimbursement granted/relent to the project. OFID loan funds granted to the project will be recorded as foreign loan receipts and central budget supplementary expenditures for the provincial budget or recorded as foreign loan expenditures for the competent authority to implement the project. OFID loan funds relent to the project will be recorded as foreign loan receipts and relending expenditures for the project.

Article 8. Project settlement

Projects using OFID loan funds shall conduct annual settlements in accordance with Circular No. 210/2010/TT-BTC dated December 20, 2010 of the Ministry of Finance on the settlement of basic construction investment capital from state budget sources on an annual basis, and shall complete project settlement upon completion in accordance with Circular No. 19/2011/TT-BTC dated February 14, 2011 of the Ministry of Finance on the settlement of completed projects from state capital sources.

Article 9. Financial statement audit

1. The annual financial statement audit of OFID projects aims to verify and confirm the accuracy and validity of the project's financial statements for a fiscal year regarding financial management, asset management, and equipment management of the project according to the commitments between OFID and the Government, while confirming that the project resources have been used appropriately in accordance with the procedures, regulations, policies, and financial accounting systems agreed upon by the Government and OFID in the OFID loan agreement for the project.

2. The annual financial statement audit of OFID loan projects must comply with OFID’s audit requirements and current domestic regulations. The annual financial audit report must be submitted to OFID and the Ministry of Finance within four months after the end of the fiscal year.

3. During the annual financial statement audit of OFID loan projects, the auditing company, auditors, and project sponsors must adhere to current auditing regulations as well as auditing standards and professional ethics standards. Auditing companies selected to perform OFID project audits must be legally operating auditing firms in Vietnam listed annually by the Ministry of Finance (or authorized professional organizations by the Ministry of Finance) as having the necessary qualifications to conduct audits.

4. In addition to annual financial statement audits, OFID loan projects may engage in audits of individual project components, works, or tasks (with special characteristics or large scale and funding amounts) if there is a need for separate audits.

Article 10. Reporting and Monitoring System

1. Quarterly, the Project Management Board shall submit progress reports and implementation status reports to OFID.

2. Monthly, quarterly, and annually, the Project Management Board shall prepare reports on the use of OFID funds from the source account, co-financing funds, and counterpart funds, send them to the State Treasury office for reconciliation and confirmation, and simultaneously send them to the supervising authority, the Ministry of Finance, and the Ministry of Planning and Investment as a basis for monitoring and supervision.

3. Financial authorities at all levels and project supervising authorities may independently or in coordination with relevant agencies conduct periodic or spot inspections and audits of projects utilizing OFID funds concerning financial management issues as stipulated in this Circular.

Article 11. Implementation Organization

1. This Circular takes effect from February 12, 2012.

2. If the legal documents cited in this Circular are supplemented, amended, or replaced, they shall be implemented in accordance with those supplementary, amended, or replacement documents.

3. During the implementation process, if any difficulties arise, the relevant agencies are requested to promptly report to the Ministry of Finance for guidance and collaborative resolution.