Circular No. 218/2013/TT-BTC on financial management for programs and projects using official development assistance (ODA) funds and preferential foreign loans from sponsors.

CIRCULAR

REGULATIONS ON FINANCIAL MANAGEMENT FOR PROGRAMS AND PROJECTS USING OFFICIAL DEVELOPMENT ASSISTANCE (ODA) FUNDS AND FOREIGN LOAN FUNDS FROM SPONSORS

BASED ON THE STATE BUDGET LAW

01/2002/QH11 dated December 16, 2002;

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BASED ON THE PUBLIC DEBT MANAGEMENT LAWNo. 29/2009/QH12 dated June 17, 2009;

DECREE NO. 60/2003/NĐ-CP dated June 6, 2003 OF THE GOVERNMENT ISSUING DETAILED PROVISIONS AND GUIDELINES FOR IMPLEMENTATION OF THE STATE BUDGET LAW;intention DECREE NO. 78/2010/NĐ-CP dated July 14, 2010 OF THE GOVERNMENT ON RELENTING FOREIGN LOANS OF THE GOVERNMENT;No. DECREE NO. 79/2010/NĐ-CP dated July 14, 2010 OF THE GOVERNMENT ON PUBLIC DEBT MANAGEMENT OPERATIONS;

Pursuant to DecreeNo. DECREE NO. 38/2013/NĐ-CP dated April 23, 2013 OF THE GOVERNMENT ON MANAGEMENT AND USE OF OFFICIAL DEVELOPMENT ASSISTANCE (ODA) FUNDS AND FOREIGN LOAN FUNDS FROM SPONSORS;"b) In addition to the lists of public services issued according to the provisions of Clause 2, Article 4 of this Decree, specialized agencies under provincial People's Committees shall report to the provincial People's Committee for decision-making on amending, supplementing, or issuing the list of public services funded by the state budget within their jurisdiction and consistent with the local budget capacity within the approved budget by the Provincial People's Assembly, and send it to the Ministry of Finance and relevant ministries and sectors for supervision during implementation."DECREE NO. 215/2013/NĐ-CP dated December 23, 2013 OF THE GOVERNMENT PROVIDING FOR THE FUNCTIONS, TASKS, ORGANIZATION STRUCTURE OF THE MINISTRY OF FINANCE;ANNEX I.A[31] AT THE SUGGESTION OF THE DIRECTOR OF THE DEPARTMENT OF DEBT MANAGEMENT AND FOREIGN FINANCE;ớTHE MINISTER OF FINANCE ISSUES THIS CIRCULAR REGULATING FINANCIAL MANAGEMENT FOR PROGRAMS AND PROJECTS USING OFFICIAL DEVELOPMENT ASSISTANCE (ODA) FUNDS AND FOREIGN LOAN FUNDS FROM SPONSORS.

Pursuant to DecreeNo. Article 1. This Circular guides the financial management regime for programs and projects using Official Development Assistance (ODA funds) and foreign loan funds from sponsors as prescribed in Decree No. 38/2013/NĐ-CP dated April 23, 2013 of the Government on management and use of Official Development Assistance (ODA) funds and foreign loan funds from sponsors.No.Article 2. For programs and projects with specific characteristics using ODA loans and preferential loans, depending on management requirements, the Ministry of Finance or jointly with the relevant ministries will issue guidelines for financial management for each specific program or project.

Pursuant to DecreeNo. Article 3. Non-reimbursable ODA grants that are disbursed separately for independent sub-projects within a program or project using ODA loans and preferential loans shall be regulated according to Circular No. 225/2010/TT-BTC dated December 31, 2010 of the Ministry of Finance guiding the state financial management regime for non-reimbursable foreign aid under state budget revenue and subsequent amendments or replacements thereof, which are not within the scope of this Circular. reason Article 4. Foreign loans guaranteed by the Government shall be regulated according to Decree No. 15/2011/NĐ-CP dated February 16, 2011 of the Government on issuance and management of Government guarantees and related guidance documents, which are not within the scope of this Circular.

Pursuant to DecreeNo. Article 5. In cases where the financial management regulations in this Circular differ from international agreements on ODA and preferential loans, the provisions of those international agreements shall apply.1Article 6. The terms used in this Circular shall be understood consistently with Articles 3 and 4 of Decree No. 38/2013/NĐ-CP dated April 23, 2013 of the Government."b) In addition to the lists of public services issued according to the provisions of Clause 2, Article 4 of this Decree, specialized agencies under provincial People's Committees shall report to the provincial People's Committee for decision-making on amending, supplementing, or issuing the list of public services funded by the state budget within their jurisdiction and consistent with the local budget capacity within the approved budget by the Provincial People's Assembly, and send it to the Ministry of Finance and relevant ministries and sectors for supervision during implementation."The subjects to whom this Circular applies are agencies, organizations, and individuals assigned responsibility or involved in managing and using ODA funds and foreign loan funds from sponsors.No.DOMESTIC FINANCIAL MECHANISM

Pursuant to DecreeNo. Article 3. Domestic financial mechanism applicable to programs and projects using ODA funds and foreign loan fundsy 1. Principles for determining the financial mechanism (allocation, relending)onThe Director of the Office, Heads of Payment Department, Heads of units under the State Bank of Vietnam; credit institutions, foreign bank branches, payment switching organizations, electronic transaction settlement organizations are responsible for implementing this Circular.of the Government stipulating functions, tasks, powers, and organizational structure of the Ministry of Home Affairs4. The list, format, and explanation of methods for preparing mandatory accounting vouchers are specified in Appendix 01 "Mandatory Accounting Voucher System" attached to this Circular. For economic transactions that have not been covered by the vouchers specified in Appendix 01, the unit must prepare accounting vouchers that meet at least seven contents stipulated in Article 16 of the Accounting Law 2015."b) In addition to the lists of public services issued according to the provisions of Clause 2, Article 4 of this Decree, specialized agencies under provincial People's Committees shall report to the provincial People's Committee for decision-making on amending, supplementing, or issuing the list of public services funded by the state budget within their jurisdiction and consistent with the local budget capacity within the approved budget by the Provincial People's Assembly, and send it to the Ministry of Finance and relevant ministries and sectors for supervision during implementation."c) Supplementing point c of Clause 3 as follows:

a) Allocation from the state budget from ODA and preferential loan funds for investment programs and projects in infrastructure, social welfare, and other sectors without direct capital recovery capabilities, as stipulated by the State Budget Law.

1. Selling state property through public listing."b) In addition to the lists of public services issued according to the provisions of Clause 2, Article 4 of this Decree, specialized agencies under provincial People's Committees shall report to the provincial People's Committee for decision-making on amending, supplementing, or issuing the list of public services funded by the state budget within their jurisdiction and consistent with the local budget capacity within the approved budget by the Provincial People's Assembly, and send it to the Ministry of Finance and relevant ministries and sectors for supervision during implementation."b) Relending in full or in part from ODA and preferential loan funds for:g - Investment programs and projects capable of recovering all or part of the ODA and preferential loan funds, including infrastructure construction projects, consistent with the national economic and social development orientation approved by competent authorities;"b) In addition to the lists of public services issued according to the provisions of Clause 2, Article 4 of this Decree, specialized agencies under provincial People's Committees shall report to the provincial People's Committee for decision-making on amending, supplementing, or issuing the list of public services funded by the state budget within their jurisdiction and consistent with the local budget capacity within the approved budget by the Provincial People's Assembly, and send it to the Ministry of Finance and relevant ministries and sectors for supervision during implementation."for acquisition, reacquisition, or renunciation of Vietnamese nationality.No.- Programs and projects not included in the state budget expenditure;No.- Programs and projects managed by provincial People's Committees as entities required to relend ODA and preferential loan funds from the Government."b) In addition to the lists of public services issued according to the provisions of Clause 2, Article 4 of this Decree, specialized agencies under provincial People's Committees shall report to the provincial People's Committee for decision-making on amending, supplementing, or issuing the list of public services funded by the state budget within their jurisdiction and consistent with the local budget capacity within the approved budget by the Provincial People's Assembly, and send it to the Ministry of Finance and relevant ministries and sectors for supervision during implementation."c) For programs and projects requiring special disbursement and capital recovery mechanisms (results-based disbursement, milestone-based disbursement, PPP projects, mixed-source financing projects), the Ministry of Finance shall take the lead, coordinate with the Ministry of Planning and Investment, the supervising agency, and the project owner to study and report.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

d) In cases where international agreements on ODA and preferential loans with sponsors contain different financial mechanism provisions for programs and projects, the Ministry of Finance shall coordinate with the Ministry of Planning and Investment and the leading negotiation agency to report.

2. The nature of project funding is determined based on the following types of projects:

a) Basic construction projects (hereinafter referred to as "BCP"): investment projects related to new construction, expansion, or renovation of construction works for maintenance, development, and quality improvement purposes;

b) Administrative and public service projects (hereinafter referred to as "APSP"): investment projects for administrative and public service contents not covered by investment projects as specified in paragraph a of this clause;

c) Relending projects: investment projects funded by relending foreign loans of the Government;

d) Mixed projects: projects combining at least two of the three expenditure types of BCP, APSP, or relending projects (including relending under programs and credit limits).

Article 2. Applicability

For mixed projects, the project owner must clearly define the components or expenditure items of the project funded by BCP and APSP sources. In exceptional cases, if the project expenditure has a mixed nature but the project owner proposes to apply it uniformly as either BCP or APSP, the project owner must provide a clear explanation of their proposal during the project preparation and approval process for the competent authority to consider and decide.

Chapter II

3. Process for determining the domestic financial mechanism

Article 3. Domestic financial mechanism applied to programs and projects using ODA funds and concessional foreign loans

1. Principles for determining the domestic financial mechanism (disbursement, rescheduling)

a) Disbursement from the state budget from ODA funds and concessional foreign loans for investment programs and projects in infrastructure, social welfare, and other programs and projects that cannot directly recover costs and are part of the state budget's expenditure tasks, in accordance with the State Budget Law.

b) Rescheduling all or part of ODA funds and concessional foreign loans for:

- Investment programs and projects capable of fully or partially recovering ODA funds and concessional loans, including infrastructure construction projects, consistent with the country's socio-economic development orientation approved by competent authorities;

- Programs and projects not included in the state budget's expenditure tasks;

- Programs and projects where the provincial People's Committee is the managing agency required to reschedule ODA and concessional government loans.

c) For programs and projects with special disbursement and capital recovery mechanisms requiring special financial mechanisms (results-based disbursement, phased disbursement according to project milestones, PPP projects, mixed projects funded by multiple sources), the Ministry of Finance shall take the lead, coordinate with the Ministry of Planning and Investment, the managing agencies, and the project sponsors to study and report.

d) In cases where draft international agreements on ODA and concessional loans with donors contain different provisions regarding the application of financial mechanisms to programs and projects, the Ministry of Finance shall coordinate with the Ministry of Planning and Investment and the leading negotiation agency to report.

2. The nature of project funding is determined based on the following types of projects:

a) Basic construction projects (hereinafter referred to as "XDCB"): investment projects related to new construction, expansion, or renovation of works aimed at maintenance, development, and improvement of quality;

b) Administrative and public service projects (hereinafter referred to as "HCSN"): investment projects for administrative and public service contents not covered under the investment project types specified in Point a of this Clause;

c) Rescheduling projects: investment projects funded by rescheduled foreign government loans;

d) Mixed projects: projects combining at least two of the three expenditure types of basic construction, administrative and public services, or rescheduling projects (including rescheduling under credit programs and credit limits).

For mixed projects, the project sponsor must clearly define the components or expenditure items of the project funded by basic construction and administrative and public service sources. In exceptional cases, if the project's expenditure items have a mixed nature but the project sponsor proposes applying the same expenditure nature as either basic construction or administrative and public services, the project sponsor must provide a clear explanation of their proposal to the managing agency during project preparation and approval for the competent authority to consider and decide.

3. Process for determining the domestic financial mechanism

a) The managing agency and the project sponsor shall cooperate with the financier to develop the Program and Project Outline in accordance with the Program and Project Outline template prescribed in Article 16 of Decree No. 38/2013/NĐ-CP dated April 23, 2013 of the Government on management and utilization of official development assistance (ODA) and preferential loan sources.

- The Program and Project Outline must include information on the total ODA capital, preferential loans, and counterpart funds for the program and project, along with proposals for domestic financial mechanisms applicable to ODA and preferential loans, clearly stating the ability and repayment plans (for programs and projects involving refinancing), determined according to the principles set forth in Clause 1 of this Article.

- The Ministry of Finance shall provide comments on the principles regarding the domestic financial mechanism proposed in the Program and Project Outline using ODA loans and preferential loans. The Ministry of Planning and Investment shall compile and submit to the Prime Minister for approval the List of Grants (for Lists of Grants within the Prime Minister's approval authority).

- The Ministry of Planning and Investment shall provide comments on the principles of the domestic financial mechanism proposed in the Program and Project Outline using non-refundable ODA aid. The managing agency shall consider and decide to approve the List of Grants (for Lists of Grants within the managing agency's approval authority).

b) In cases where during the construction and approval of the Grant List as mentioned in point a) above, there is not yet sufficient basis and detailed information to propose specific financial mechanisms for the project, the managing agency and the project sponsor must continue to study and propose domestic financial mechanisms applicable to the project to be submitted to the Ministry of Finance and relevant agencies for comments before submitting to the competent authority for approval of the Program and Project Document/Feasibility Study Report of the investment project.

c) In cases where during the negotiation of the Loan Agreement/Funding Agreement new contents arise that have not been determined in the financial mechanisms during the approval of the Program and Project Document/Feasibility Study Report of the investment project, or other objective factors arise requiring supplementation or modification of the financial mechanisms in the approved Program and Project Document/Feasibility Study Report of the investment project, the managing agency and the project sponsor are responsible for reporting to the Ministry of Finance for review and submission to the Prime Minister for approval of the domestic financial mechanisms officially applied to programs and projects using ODA and preferential loan sources, prior to signing the Loan Agreement/Funding Agreement.

4. Determining specific terms and conditions for refinancing for programs and projects using ODA and foreign preferential loan sources:

a) Based on the results of the financial plan assessment of the refinancing program and project and the assessment of the borrower's financial capacity by the refinancing lender, the Ministry of Finance shall apply the refinancing terms and conditions stipulated in Decree No. 78/2010/NĐ-CP dated July 14, 2010 of the Government for refinancing programs and projects and the specific provisions in this Circular.

The time for assessing and notifying refinancing conditions shall be carried out in accordance with the specific provisions in Article 19 of Decree No. 78/2010/NĐ-CP dated July 14, 2010 of the Government.

b) In special cases, including cases where the foreign lender requests the application of different refinancing terms and conditions from those prescribed in Decree No. 78/2010/NĐ-CP dated July 14, 2010 of the Government, the Ministry of Finance shall take the lead in researching and soliciting opinions from relevant agencies to report to the Prime Minister for consideration and decision on each specific case.

5. The Ministry of Finance or the refinancing lender authorized by the Ministry of Finance shall sign Refinancing Agreements/Secondary Loan Agreements with the refinancing borrower based on the specific refinancing terms and conditions determined in accordance with Clauses 3 and 4 of this Article as the basis for managing the use and recovery of refinanced loans.

Article 4. Domestic financial mechanism applied to programs and projects of localities

1. Allocation of ODA funds and preferential foreign loans for localities

The central budget allocates funds in the form of targeted support to the local budgets from ODA funds and preferential foreign loans of the Government, to implement investment projects in infrastructure, social welfare, and other projects that cannot directly recover capital and are within the spending responsibilities of the state budget as stipulated by the State Budget Law.

2. Repayment of all or part of the ODA funds of the Government for:

a) Investment projects for socio-economic development within the spending responsibilities of the local budget that have completed investment procedures and the local budget ensures the ability to repay debt.

b) Component projects within the province or city under programs managed by ministries and departments, which have the ability to recover capital and are implemented by component project owners under the provincial People's Committee.

3. Based on the purpose of each loan, the Ministry of Finance submits to the Prime Minister for decision on specific repayment mechanisms for each project.

4. Provincial People's Committees may borrow ODA funds and preferential foreign loans when meeting the following conditions:

a) Being authorized by competent authorities to borrow from foreign loans of the Government;

b) Having investment projects for socio-economic development within the spending responsibilities of the local budget that have completed investment procedures according to laws on investment and related laws;

c) The local budget is assessed as having the ability to repay debt.

5. The Ministry of Finance evaluates the debt repayment capacity of the provincial budget according to the provisions of Decree No. 78/2010/ND-CP dated July 14, 2010 of the Government and relevant laws, and submits to the Prime Minister for decision on domestic financial mechanisms applicable to each source of ODA and preferential loans of the locality.

Article 5. Conditions for borrowing applied to financial and credit organizations participating in borrowing programs and credit limits

1. Conditions for borrowing by financial and credit organizations:

a) Having programs and projects approved by competent authorities to use borrowed funds and accepted by foreign lenders;

b) Ensuring the ability to repay debt according to the financial plan reviewed according to the law.

2. Conditions for borrowing from the Ministry of Finance to financial and credit organizations participating in programs and credit limits:

a) Interest rates for borrowing are implemented according to the provisions of Decree No. 78/2010/ND-CP dated July 14, 2010 of the Government.

b) Loan period and grace period for financial and credit organizations shall not exceed the loan period and grace period of the original foreign loan.

c) In special cases, including cases where foreign lenders require different borrowing conditions from those specified in Decree No. 78/2010/ND-CP dated July 14, 2010 of the Government, the Ministry of Finance will take the lead in researching, seeking opinions from relevant agencies to report to the Prime Minister for consideration and decision on each specific case.

3. Evaluation and selection of financial and credit organizations participating in programs and credit limits

a) For borrowing ODA loans: The Ministry of Finance directly reviews the use of borrowed funds and repayment plans of financial and credit organizations participating in the program before signing the Rescheduling Agreement/Lending Subsidiary Agreement.

b) For borrowing preferential loans: The State Bank of Vietnam evaluates the financial capacity and use of borrowed funds and repayment plans of financial and credit organizations participating in the program and credit limit, and informs the Ministry of Finance of the review results before signing the Rescheduling Agreement/Lending Subsidiary Agreement.

c) Financial and credit organizations lending to end users of funds are responsible for reviewing projects and selecting final borrowers consistent with the agreed credit program with sponsors, and bear all risks arising from rescheduling.

Article 6. Domestic financial mechanism applied to the private sector when accessing ODA funds and preferential foreign loans

1. The private sector may access ODA funds and preferential foreign loans through the loan refinancing mechanism, specifically as follows:

a) Refinancing ODA funds and preferential loans when participating in investment projects in priority sectors for the use of ODA funds and preferential loans of the Government, in accordance with the domestic financial mechanism stipulated in Article 3 of this Circular.

b) Refinancing ODA funds and preferential loans from domestic financial and credit organizations through programs and credit limits, and applying the domestic financial mechanism stipulated in Article 5 of this Circular.

c) Refinancing preferential government loans in accordance with the conditions under which the Government borrows from abroad, when participating in investment projects under the public-private partnership (PPP) model.

d) Participating in programs and projects aimed at supporting the private economic sector, managed by the program's managing agency: The managing agency is responsible for appraising private economic sector projects participating in the program or project based on the common financial mechanism approved by the competent authority.

In cases where there is no common financial mechanism for the approved program or project, the managing agency proposes a domestic financial mechanism applicable to each program or project and sends it to the Ministry of Finance for review and submission to the Prime Minister for decision.

2. Conditions for consideration to access ODA funds and preferential loans and requirements for appraisal of project sponsors:

a) Conditions for consideration to access ODA funds and preferential loans for project sponsors that are enterprises in the private economic sector

- For investment projects requiring a minimum of 20% of the total approved investment capital to be equity capital (after deducting the equity capital for other ongoing investment projects, if any), the project sponsor must report to the appraisal agency regarding the list of ongoing investment projects, specifying the amount of investment capital, progress of investment, plans for using equity capital and raised capital to implement these projects, serving as the basis for considering the conditions for accessing ODA funds and preferential loans and bearing responsibility for the accuracy of the report.

- Financial health, not having losses in the three consecutive years immediately preceding the year of application for ODA funds and preferential loans, without accumulated losses and ensuring safety thresholds for debt ratio and liquidity ratio; at the time of application for ODA funds and preferential loans, there should be no overdue debts with financial and credit institutions; no overdue debts related to government-guaranteed loans, government refinanced foreign loans, and state budget loans. If the enterprise has not been operating continuously for three years, it must have a commitment letter from the owner or parent company to repay the debt on behalf of the enterprise in case the enterprise cannot repay the government refinanced loan. In cases where there is no parent company or owner, the enterprise must have a guarantee of repayment from a commercial bank or another form of security approved by the Ministry of Finance.

- Enterprises refinancing must use collateral measures in accordance with the law to ensure compensation for credit risks and other potential risks. Collateral includes assets formed from government loans and other assets as prescribed by law.

b) Appraisal and selection of project sponsors that are enterprises in the private economic sector:

- For programs and credit limits: financial and credit organizations appraise and select according to the provisions at point c) Clause 3, Article 5 above.

- For investment projects in priority sectors for the use of ODA funds and preferential loans of the Government as specified at point c) Clause 1 of this Article. After the investment project has completed the required investment procedures in accordance with the law on investment and been appraised and decided upon by the competent authority, the Ministry of Finance may delegate the refinancing agency or hire an independent consulting organization to appraise the financial capacity and repayment plan of the project sponsor. The appraisal organization bears responsibility for the results of the appraisal. The project sponsor is responsible for paying the appraisal costs, which can be included in the total investment capital of the project (if receiving ODA funds and preferential loans) or included in the production and business costs of the sponsoring enterprise.

c) Conditions for receiving ODA funds and preferential loans for the private economic sector in programs and credit limits, in cases where the project sponsor is an individual such as households or individuals, will be appraised and determined by financial and credit organizations for each specific case.

Chapter III

ANNUAL CAPITAL PLAN

Article 7. Annual capital plan development

1. The annual capital plan for programs and projects using ODA funds and preferential loans is the disbursement plan for ODA funds and preferential loans and the counterpart capital plan as stipulated in Articles 61 and 62 of Decree No. 38/2013/ND-CP dated April 23, 2013 of the Government. The forms for the ODA disbursement plan and preferential loan disbursement plan and the counterpart capital plan shall be uniformly implemented according to the Circular of the Ministry of Planning and Investment guiding the implementation of Decree No. 38/2013/ND-CP dated April 23, 2013 of the Government.

2. Based on the overall plan for implementing programs and projects approved by the managing agency as provided for in Article 37 of Decree No. 38/2013/ND-CP dated April 23, 2013 of the Government, the project owner shall prepare the annual implementation plan for programs and projects to serve as the basis for approving the annual capital allocation plan of the managing agency as provided for in Article 38 of Decree No. 38/2013/ND-CP dated April 23, 2013 of the Government, including:

a) The annual disbursement plan for ODA funds and preferential loans shall be prepared separately for each donor and allocated based on the nature of fund usage (construction, administrative and public services, relending, budget support).

b) The annual disbursement plan for counterpart funds shall be prepared separately for each managing agency and allocated based on the source of funding (central government budget, local government budget, project owner's capital, and other sources of funds).

The contents of the counterpart capital plan for preparing and implementing programs and projects using ODA funds and preferential loans are specifically provided for in Article 43 of Decree No. 38/2013/ND-CP dated April 23, 2013 of the Government. Managing agencies must prioritize allocating counterpart funds in the annual state budget estimate to fulfill commitments under international agreements on ODA and preferential loans and to align with the actual disbursement capacity of programs and projects using ODA funds and preferential loans annually.

3. The managing agency is responsible for consolidating and approving the annual capital allocation plan for programs and projects as provided for in Article 37 of Decree No. 38/2013/ND-CP dated April 23, 2013 of the Government, and sending it to the Ministry of Planning and Investment, the Ministry of Finance, and related agencies (oversight agencies, relending agencies, service banks).

4. For projects funded from the state budget, the Ministry of Planning and Investment shall prepare and consolidate the annual disbursement plans for ODA funds and preferential loans and the counterpart capital plan as provided for in Article 61 of Decree No. 38/2013/ND-CP dated April 23, 2013 of the Government, and send them to the Ministry of Finance for consolidation into the annual state budget plan.

5. For projects involving relending of ODA funds and preferential loans and counterpart funds arranged by the project owner, the project owner shall bear responsibility for preparing and approving the annual capital plan.

Article 8. Procedure for Developing the Annual Capital Plan

1. For projects funded from the state budget:

a) Annually, at the time of preparing, submitting, and reviewing the state budget estimate according to current regulations, the project owner shall base on the progress of the project to prepare the investment capital plan for the project or the operational capital plan and submit it to the managing agency for consolidation into the general budget plan to be sent to the Ministry of Finance and the Ministry of Planning and Investment for submission to the Prime Minister and the National Assembly for approval.

b) The approval, allocation, and notification procedures for the capital plan must comply strictly with current regulations on budget preparation and execution. The decision of the managing agency approving the annual allocation plan must be sent to the financial agency at the same level and the oversight agency.

c) In cases where an international agreement on the project has been signed but not yet effective, or is already effective but the project has not completed domestic investment procedures within the budget estimate period, the managing agency shall have the responsibility to report to the Ministry of Planning and Investment and the Ministry of Finance about the need for counterpart funds and advance funds of the project to timely allocate or submit to the competent authority for decision (in the case where the central government is responsible for allocating counterpart funds); or the project owner shall have the responsibility to report to the local project managing agency about the need for counterpart funds and advance funds of the project to submit to the competent authority for timely allocation or submit to the competent authority for decision (in the case where the local government is responsible for allocating counterpart funds).

d) For projects arising after the budget estimate period, the project managing agency shall prepare a supplementary financial plan or advance budget estimate for the next year and send it to the financial agency, planning and investment agency for processing according to the State Budget Law and current guiding documents.

2. For relending projects:

Annually, at the same time as preparing the state budget estimate according to current regulations, the project owner shall prepare the annual capital plan for the project, clearly stating the sources of ODA funds, preferential loans, and counterpart funds, and submit it to the Ministry of Finance and the Ministry of Planning and Investment. The project owner shall be responsible for balancing sufficient counterpart funds according to the project implementation schedule.

3. For mixed projects involving both grants and relending:

Depending on the financial mechanism applied to each component of the project, either grant or relending, the project owner shall apply the corresponding procedures for preparing and submitting the project capital allocation plan according to the provisions of Sections 1 and 2 of this Article.

Chapter IV

SERVICE BANK

Article 9. Selection of Serving Bank

1. "Serving Bank" is a commercial bank selected from the list of qualified commercial banks to conduct foreign transactions and provide banking services for ODA capital projects and preferential loan projects. The list of qualified commercial banks is determined and announced by the State Bank of Vietnam.

2. Criteria for selecting a serving bank for specific programs and projects:

a) Meeting all regulations of the State Bank of Vietnam regarding financial safety ratios applicable to credit organizations;

b) Having an operational area suitable with the area of the program or project using ODA loans and preferential loans;

c) Adhering to or committing to adhere to government, Ministry of Finance regulations, and donor regulations on managing ODA funds and preferential loans.

Article 10. Accounts at the Serving Bank

1. Except for projects implemented under the budget support method which must open accounts at the National Treasury where transactions take place to facilitate control over expenditures, withdrawal of funds for the project, and state budget accounting, the Project Owner or the Ministry of Finance may open transaction accounts (advance payment accounts/special accounts) at the serving bank in accordance with the project's payment requirements and stipulated in the Loan Agreement/Funding Agreement.

Projects with multiple sources of funding must open separate accounts to track each source of funds withdrawn.

In cases where a project has multiple levels of management implementation and according to an agreement with the donor, a second-level advance payment account is designed, the Project Owner opens a second-level advance payment account at a branch of the serving bank.

2. Interest generated on advance payment accounts/special accounts, as the account holder, must be recorded separately and during the project implementation period can only be used to pay the serving bank's service fees.

By February 15th each year, the Project Owner is responsible for reporting to the Ministry of Finance the situation of interest usage on the balance of advance payment accounts/special accounts of the previous year.

3. Handling residual interest balances in advance payment accounts/special accounts:

a) For projects funded by the state budget: after the project ends, if there is still a residual interest balance, the Project Owner must deposit the entire balance into the state budget.

b) For projects involving rescheduling loans where the Project Owner incurs debt from withdrawing funds into advance payment accounts/special accounts, interest generated on advance payment accounts/special accounts at the serving bank is income for the Project Owner or financial credit institutions that reschedule government loans.

c) Interest generated on deposits at the serving bank for credit limits/credit components borrowed by financial and credit institutions from the government and bearing credit risks is income for those financial and credit institutions and is handled according to the Law on Credit Institutions and related laws.

Chapter V

PROCEDURES FOR WITHDRAWING FUNDS AND MANAGING WITHDRAWALS

Article 11. Forms of Withdrawal

The forms of withdrawing ODA and preferential loans are specifically defined in loan agreements and funding agreements, including:

1. For the budget support method:

a) Withdrawing funds once into the state budget: this is carried out for direct budget support programs or regional/global cooperation programs directly implemented by the Government.

b) Withdrawing funds multiple times into the state budget: this is carried out for programs with policy frameworks; credit limit programs; program/project blocks; or according to World Bank (WB) results-based funding methods.

2. For the program/project funding method: it is carried out through one or more of the following withdrawal forms:

a) Direct Payment/Transfer Payment:

- Direct Payment: this form involves the Borrower requesting the Donor to directly transfer payment to the contractor/supplier of the project.

- Transfer Payment: this form involves direct payment and/or repayment as mentioned in point c) below in Vietnamese Dong.

b) Payment by Guarantee Letter: this form involves the Donor issuing a guarantee letter upon the Borrower's request, agreeing to repay the amount paid to the contractor/supplier via a Letter of Credit (L/C) system through commercial banks (lending bank, serving bank).

c) Repayment: this form involves the Donor paying money from the loan account into an account designated by the Borrower to reimburse legitimate expenses incurred by the Borrower/Project Owner for the loaned project. These legitimate expenses may occur before or after signing the foreign loan agreement and must comply with specific provisions in the foreign loan agreement.

d) Advance Payment Account/Special Account:

The Advance Payment Account form involves the Donor temporarily advancing a sum of money requested by the Borrower into a special account opened exclusively for the project at a serving bank, allowing the Borrower to proactively manage payments for regular and legitimate project expenses, reducing the number of loan withdrawals, while the Donor closely monitors payments from this special account for project activities.

Article 12. Procedures for withdrawing funds for ODA and preferential loans under budget support methods

1. For programs accompanied by policy frameworks, the Project Owner or the supervising agency shall be responsible for leading or coordinating with the Ministry of Finance/the State Bank and relevant agencies to fulfill their commitments according to agreements with the financier, to satisfy the preconditions for fund withdrawal stipulated in loan agreements.

2. For budget support projects/programs based on outcome-based disbursement, the Project Owner or the supervising agency shall be responsible for leading and coordinating with relevant agencies to implement disbursement indicators according to agreements with the financier as the basis for fund withdrawal. The Project Owner may receive advance funds in accordance with the financier's regulations to carry out agreed tasks aimed at achieving disbursement-linked commitments.

3. The Project Owner or the supervising agency shall be responsible for leading or coordinating with relevant agencies to prepare reports, documents, or provide specific evidence proving the completion of framework commitments on policies and disbursement criteria specified in project documents or financing agreements, to submit to the financier and the Ministry of Finance for fund withdrawal requirements.

4. The Ministry of Finance shall be responsible for compiling withdrawal applications and documents sent to the financier, while coordinating with the State Bank, serving banks, and the Project Owner in transferring withdrawn funds to the state budget for use according to agreements with the financier.

5. For national target program support funds and sectoral budget support programs:

a) The program/project supervising agency shall coordinate with the Ministry of Finance on the timing, amount, and account for receiving ODA and preferential loan funds, and cooperate with the Ministry of Finance in planning allocation and transferring funds to sub-projects implementing the program.

b) ODA and preferential loan funds withdrawn to the budget for expenditure on program objectives and contents shall be implemented in accordance with the current procedures for budgetary expenditure control, payment issuance for state budget funds applicable to national target programs and sectoral budget support programs.

6. Withdrawal documents: comply strictly with the provisions and agreements with the financier.

Article 13. Procedures for withdrawing funds for ODA and preferential loans under project financing methods

1. After the financier announces the preconditions for fund withdrawal according to the terms of loan agreements/financing agreements have been completed, the Project Owner or the project management board shall prepare a withdrawal application document to send to the Ministry of Finance.

2. The withdrawal application document shall be prepared based on specific templates provided by the financier and detailed guidelines for each type of withdrawal as stipulated in Articles 14 and 15 of this Circular, including the following types:

a) Legal documents submitted once.

b) Documents submitted for each withdrawal.

3. Within five working days from receipt of a complete and valid withdrawal application document, the Ministry of Finance shall sign the withdrawal application to send to the financier.

4. In cases where the financier requests additional documents or only approves part of the withdrawal application, the Ministry of Finance shall notify the Project Owner to promptly address reasonable requests from the financier.

Article 14. Legal Documents to be Submitted Once

1. The project proponent shall submit a set of legal documents to be submitted once to the Ministry of Finance, simultaneously sending them to the Expenditure Control Agency as the legal basis for managing the withdrawal of ODA and preferential loan funds for each program and project. This set of documents includes the following basic documents:

a) The financing agreement signed between the Government of Vietnam and the financier (Vietnamese translation with signatures and seals of the project proponent, to be sent only to the expenditure control agency);

b) The investment project (Feasibility Study Report) and/or Project Documentation approved by the competent authority, along with the Investment Decision on the project issued by the competent authority (copies); Approved total budget estimate (if any);

c) The contract between the project proponent and the contractor and related documents concerning payment conditions, excluding drawings and technical/design documents (copies); if the contract is only signed in a foreign language, a Vietnamese translation of the provisions regarding payment must be attached, bearing the signature and seal of the project proponent;

d) Agreements, letters, or "no objection" documents from the financier; agreements with the contractor regarding the implementation of the project (eligible cost items, contracts; performance bond); approved budgets for each work package, tender, and project (for direct award and works carried out without a contract) and other relevant project documents (if any);

đ) The annual capital plan approved by the competent authority;

e) The rescheduling loan agreement signed between the project proponent and the Rescheduling Agency (if any).

2. The project proponent shall only submit copies of these documents to the Ministry of Finance once when establishing the first withdrawal application file. The project proponent is responsible under the law for the authenticity of the copies provided to the Ministry of Finance. However, the original annual financial plan must be submitted to the Ministry of Finance and the Expenditure Control Agency.

Article 15. Documents to be Submitted Each Time for Withdrawal

In addition to the legal documents to be submitted once as stipulated in Article 14 above, for each withdrawal amount/drawdown, the project proponent shall establish and submit to the Ministry of Finance a withdrawal file, specifically tailored to each withdrawal method as follows:

1. Direct Payment/Transfer Payment (JICA)

a) A letter requesting withdrawal accompanied by the Withdrawal Form, statements according to the model, and necessary supporting documents as required by the financier;

b) Invoice/Payment Request from the Contractor/Supplier;

c) Payment Request Form confirmed (original) by the Expenditure Control Agency;

d) For post-expenditure control, the project proponent needs to handle the withdrawal process in stages as follows:

- During the interim payment period, if the value of the Payment Confirmation Letter from the Expenditure Control Agency differs from the actual amount paid in the previous period, the project proponent is responsible for adjusting this difference into the value of the next payment period.

- Final payment: The project proponent submits the Payment Request Form confirmed by the Expenditure Control Agency for the previous payment period and for the final payment period to ensure that the entire volume of payments under the project contract has been fully controlled.

2. Commitment Letter/Special Commitment Procedure

a) The project proponent shall submit to the Ministry of Finance a set of documents including the following:

- A letter requesting the financier to issue a commitment letter;

- The issuance documentation for the commitment letter according to the financier's model and a copy of the opened L/C.

b) Payment by L/C without a commitment letter: If the commercial contract contains a clause for payment by L/C without a commitment letter, the project proponent shall submit to the Ministry of Finance a letter requesting the opening of an L/C, along with a copy of the commercial contract and related documents for review and comments on the L/C issuance to be sent to the Project Management Board and the serving bank, while also sending a Notice of Authorization for Non-Cancelable Payment to the financier's authorized bank for payment under the L/C.

For JICA-funded withdrawals subject to post-payment control, after each approval of payment to the contractor/advisor, the project proponent shall submit a payment file to the Expenditure Control Agency for expenditure control. Upon receiving the expenditure control results, the project proponent shall submit to the Ministry of Finance one Claim for Payment and one Payment Request Form confirmed (original) by the Expenditure Control Agency to serve the tracking and reconciliation of withdrawal amounts with JICA.

3. Refund/Reimbursement Procedure

a) The project proponent shall submit to the Ministry of Finance a withdrawal file including the following documents:

- A letter requesting withdrawal, the Withdrawal Form, and statements according to the model;

The Withdrawal Form must clearly state the name and account number of each unit that has received advance funding. For amounts advanced from the State Budget (project preparation funds, advance funds for project implementation), the name and account number of the budget level where the advance was made must be specified.

- Proof of fund transfer showing the payment made to the contractor/beneficiary and/or a confirmation statement from the contractor/beneficiary that they have received the payment;

- Investment Capital Payment Request Form confirmed (original) by the Expenditure Control Agency.

In special cases at the request of the financier, the Ministry of Finance may require additional documents.

b) For JICA-funded withdrawals: The project proponent shall submit to the Ministry of Finance a withdrawal file including the following documents:

- The contract signed between the project proponent and the contractor and the approval documents for the contract from both the Vietnamese side and JICA, along with a Vietnamese translation bearing the signature and seal of the project proponent;

- A letter requesting withdrawal and necessary supporting documents as required by the financier;

- Payment Request Form confirmed (original) by the Expenditure Control Agency.

4. Advance Account/Special Account

a) First Withdrawal to the Advance Account (AA)

The first withdrawal to the AA is based on the limit (or ceiling) of the AA stipulated in the Loan Agreement/Funding Agreement. The AA limit may be defined for two levels (for projects involving both central and local levels), but the withdrawn funds must be transferred to the first-level AA.

After the Loan Agreement/Funding Agreement becomes effective for withdrawal, the Project Owner shall submit to the Ministry of Finance the following documents: (i) a letter requesting withdrawal of funds, (ii) a withdrawal form and accompanying bank statements according to the template provided by the financier, and (iii) a detailed expenditure plan for the next three months as prescribed by the financier, for review and signing of the withdrawal form to be sent to the financier.

b) Expenditure from Trust Fund: carried out in accordance with Article 16 of this Circular.

For the JICA loan fund, the project owner shall submit to the Ministry of Finance the following documents:

- A letter requesting payment of funds from the program/project owner;

- Payment request from the contractor/supplier/beneficiary;

- A payment request form confirmed (original) by the Expenditure Control Agency for each payment period (advance expenditure control method). In cases of advance payments, bank guarantee documents must be provided for the advance amount as stipulated.

c) Supplementing Trust Fund:

To withdraw additional funds from the Trust Fund (Level 1 Trust Fund), the Project Owner shall submit to the Ministry of Finance the following documents:

- A letter requesting withdrawal of additional funds from the Trust Fund;

- A detailed expenditure plan from the Trust Fund for the next three months;

- A withdrawal form and bank statements according to the template provided by the financier;

- A statement prepared by the Project Owner detailing each expenditure from the Trust Fund, including: date of payment, original currency amount, converted VND amount, foreign currency/VND exchange rate, payment content, beneficiary;

- A payment request form for investment capital confirmed (original) by the Expenditure Control Agency;

- Bank statement of the Trust Fund (if there is Level 2 Trust Fund, send along the statement). For JICA loans, proof of the service bank transferring payment to the beneficiary must also be provided.

The Ministry of Finance shall examine and sign/jointly sign the withdrawal form to be sent to the financier to transfer additional funds into the Trust Fund.

Article 16. Management of Withdrawal and Use of ODA and Preferential Loan Funds

1. Purpose of Expenditure Control

To ensure that ODA and preferential loan funds of the Government are used for their intended purposes and effectively, the withdrawal, expenditure, and payment of projects using ODA and preferential loan funds of the Government shall be monitored and supervised like the expenditure and use of state budget funds at budgetary units, through the implementation of expenditure control and payment (hereinafter referred to as expenditure control) from ODA and preferential loan funds of the project. Expenditure control aims to ensure that project expenditures are consistent with the Loan Agreement/Project Documentation/Contract for the use of ODA and preferential loan funds signed and comply with current domestic financial management regulations.

2. Principles of Expenditure Control

a) Expenditure control applies to all project expenditure activities.

b) Expenditure control of documents requesting withdrawal of ODA and preferential loan funds must be based on the annual disbursement plan approved. In cases where the actual withdrawal amount exceeds the approved annual disbursement plan (including due to exchange rate differences), the project owner must prepare and submit a revised plan by December 30th to cover the additional funds used during the year, ensuring that the cumulative disbursement and payment value does not exceed the total project's foreign funding limit. For counterpart funds, the expenditure control agency is responsible for controlling and confirming within the allocated counterpart fund plan.

c) Based on the project owner's payment request documents, the Expenditure Control Agency shall implement expenditure control and payment to the project owner based on the payment terms stipulated in the contract (number of payments, payment stages, payment dates, and conditions) or the budget estimate for non-contractual payments, and the value of each payment. The project owner is solely responsible for the accuracy and legality of the executed volume, rates, unit prices, budget estimates for various works, and construction quality; the Expenditure Control Agency is not responsible for these issues.

d) The Expenditure Control Agency is responsible for controlling expenditures or refusing to confirm expenditure control within five working days from receipt of complete and valid documents.

3. Expenditure Control Agencies:

a) State Treasury at all levels shall carry out the control of payment documents for projects/project components funded from the state budget.

b) Vietnam Development Bank or other lending agencies authorized by the Ministry of Finance to provide refinancing shall carry out the control of payment documents for projects/project components subject to refinancing.

c) Credit Limit Program/Credit Component:

- Financial and credit institutions authorized by the Ministry of Finance as refinancing agencies without credit risk shall carry out expenditure control over requests for withdrawal and payment by the borrower.

- Financial and credit institutions borrowing under credit programs and bearing credit risk shall be responsible for expenditure control when providing refinancing to the final borrower.

d) The Ministry of Finance shall determine appropriate expenditure control agencies for other types of programs/projects not covered under points a), b), and c) above, ensuring the principle that no two expenditure control agencies shall simultaneously control the same expenditure activity of a project.

4. Forms of Expenditure Control

a) "Advance Expenditure Control" refers to the Expenditure Control Agency checking and confirming the legitimacy of the expenditure before the Project Owner withdraws funds to pay contractors/beneficiaries.

b) "Post Expenditure Control" refers to the Expenditure Control Agency checking and confirming the legitimacy of the expenditure after the Project Owner has withdrawn funds to pay contractors/beneficiaries.

Post expenditure control shall apply to all payment requests, except for the following cases which must undergo advance expenditure control:

- Direct payment to contractors/suppliers for projects or project components funded from the state budget, excluding JICA loan projects.

- Direct payment to contractors/suppliers for contracts paid in one lump sum or the final installment of multi-installment contracts.

- Payment from a second-level account for projects with two-tier Trust Funds.

5. Documents and Procedures for Expenditure Control

a) For construction investment projects/project components funded from the state budget

- Documents and procedures for controlling expenditures for construction investment projects funded by the state budget: shall be implemented in accordance with Circular No. 86/2011/TT-BTC dated June 17, 2011, issued by the Ministry of Finance on management and settlement of investment capital and operational capital with investment characteristics from state budget sources, and any subsequent amendments, supplements, or replacements (if any), but not bound by the approval deadline for the investment project decision before October 31 of the year prior to the planning year.

- Documents confirming advance payments: in addition to the initial legal documents submitted, the project owner shall submit to the expenditure control agency the following documents:

+ A standby letter of credit equal in value to the requested advance payment, with a guarantee period sufficient to recover the entire advance payment as stipulated in the contract;

+ Payment request for investment capital; Investment withdrawal notice (in cases of domestic advance payments).

- Documents submitted each time funds are withdrawn: Since the warranty money for the project has been confirmed by the expenditure control agency with each payment, there is no need for reconfirmation when transferring warranty money. The investor is solely responsible for the warranty payment made to the contractor.

b) For projects or administrative and operational activities funded by the state budget: shall be implemented according to the expenditure control principles outlined in Circular No. 161/2012/TT-BTC dated October 2, 2012, issued by the Ministry of Finance on the system of expenditure control and settlement of state budget expenditures through the State Treasury, and any subsequent amendments, supplements, and provisions of the Circular, based on the withdrawal documents for ODA and preferential loan capital as stipulated in this Circular. In cases where the Loan Agreement/Funding Agreement or the financier has specific provisions, such provisions shall be followed.

c) Documents and procedures for controlling expenditures for rescheduling projects:

- For credit limits:

Documents and procedures for controlling expenditures for projects/components rescheduled under credit limits shall comply with the regulations of financial institutions using rescheduled ODA funds and conform to the provisions of the funding agreement and the project. Financial institutions rescheduling ODA loans shall be legally responsible for the accuracy and validity of the credit disbursements and non-credit expenditures reported to the Ministry of Finance, when preparing and submitting the withdrawal documents for foreign funds.

- Documents and procedures for controlling expenditures for other rescheduled projects/components: shall be similar to those for construction investment projects funded by the state budget.

Chapter VI

STATE BUDGET ACCOUNTING

Article 17. Opening Accounts at the State Treasury System

1. Accounts for ODA and Preferential Loan Capital:

Based on the account opening regulations for programs/projects under Clause 1, Article 10 of this Circular, and in accordance with the requirements of the implementing organization of the program/project and the written agreement with the financier, the project owner shall open an account for ODA and preferential loan capital of the project at the State Treasury system to receive ODA and preferential loan advance payments and make settlements for the project after State Treasury expenditure control.

2. Matching Capital Account: the project owner shall open an account at the State Treasury branch where transactions take place for the State Treasury to conduct expenditure control and settlement for the project's expenses, and simultaneously monitor the allocation of matching capital to the project.

Article 18. Principles of Budget Accounting

1. Official Development Assistance (ODA) funds and concessional foreign loans must be fully and promptly recorded in the state budget. The state budget accounting shall be carried out by financial agencies at all levels.

2. The recording of budget revenues and expenditures shall be based on the value of disbursed ODA funds and concessional foreign loans converted to Vietnamese Dong according to the monthly exchange rate for accounting purposes published by the Ministry of Finance (in cases where the Ministry of Finance disburses in foreign currency), or according to the disbursed value in Vietnamese Dong for projects (in cases where disbursement is made in Vietnamese Dong). The accounting of the state budget for re-lending transactions shall be conducted in accordance with the provisions of Article 4 of Decree No. 78/2010/NĐ-CP of the Government.

3. The recorded data of budget revenues and expenditures serve as one of the bases for agencies, organizations, and units permitted to use or re-lend ODA loans and concessional foreign loans from the Government to conduct accounting and settlement of the state budget in accordance with current regulations.

Article 19. Procedures for State Budget Accounting

After receiving the notice of loan withdrawal from the donor or payment vouchers from the Central Treasury/Bank Branch serving the transaction, the Ministry of Finance shall issue revenue and expenditure entries to send to the State Treasury for state budget accounting. Depending on the purpose and recipient/beneficiary, the procedures and formalities for recording budget revenues and expenditures shall be specified as follows:

1. For loans provided in cash under the general budget support form: based on bank receipt/payment confirmation vouchers, the State Treasury shall record ODA and concessional loan revenues into the state budget as prescribed (in cases where foreign currency is transferred into the centralized foreign currency fund, it shall be accounted for according to the regulations for foreign currency state budget revenues).

2. For loans provided in cash under the sectoral budget support form: based on signed funding agreements and project budgets allocated to the using/receiving entities, the State Treasury shall carry out payments, disbursements, expenditure control, and record ODA and concessional loan expenditures as prescribed, similar to state budget sources.

3. For foreign loans allocated to investment construction and administrative-servicing projects of central ministries and agencies: based on the disbursement notification from the donor or payment vouchers from the Central Treasury/Bank Branch serving the transaction, the Ministry of Finance shall record ODA and concessional loan revenues into the state budget, and record expenditures for allocating investment construction and administrative-servicing funds to central ministries and agencies according to the current state budget classification.

4. For foreign loans allocated to provinces and centrally-administered cities: based on the disbursement notification from the donor, the Ministry of Finance shall record ODA and concessional loan revenues into the state budget, and record supplementary targeted expenditures from the central budget to the local budget through the provincial finance departments. Based on the supporting documentation sent by the Ministry of Finance, the provincial finance department shall issue payment orders for local entities using the funds to send to the provincial State Treasury to implement budget allocations in accordance with the provisions of the State Budget Law.

5. For foreign loans of the Government implemented under the mechanism of direct re-lending by the Ministry of Finance to provincial People's Committees and private sectors: based on the disbursement notification from the donor, the Ministry of Finance shall record ODA and concessional loan revenues into the state budget, and record expenditures for re-lending to the re-lending agency authorized by the Ministry of Finance.

6. For foreign loans of the Government implemented under the mechanism of authorizing a financial institution to act as a re-lending agency to re-lend to investment programs and projects: based on the disbursement notification from the donor, the Ministry of Finance shall record ODA and concessional loan revenues into the state budget, and record expenditures for re-lending to the re-lending agency. Regardless of the timing of state budget revenue and expenditure entries, the re-lending agency and the borrowing project must immediately complete debt acceptance procedures upon receipt of a copy of the disbursement notification from the donor sent by the Ministry of Finance.

Article 20. Adjustment of Budgetary Accounting Data

1. The adjustment of budgetary accounting data aims to address discrepancies between recorded revenue and expenditure data of the state budget and actual settlement data for the withdrawal and utilization of ODA and preferential foreign loans, which may arise in the following cases:

a) Capital that has been withdrawn but not fully utilized or misused for purposes other than intended must be returned to the donor according to the agreement or financial assistance arrangement.

b) Transfer of the project owner according to the decision of the competent authority.

c) Changes in domestic financial mechanisms according to the decision of the competent authority (for example, shifting from a loan mechanism to direct allocation from the state budget for part or all of the ODA and preferential loans of the project).

d) Correction of errors or mistakes in the process of budgetary accounting based on reconciliation of data between state treasuries at various levels with project investors.

2. Procedures and formalities for adjustment:

a) Based on the adjustment request from the managing agency and the project owner, accompanied by specific documents, minutes, and vouchers proving the case, the Ministry of Finance (Debt Management and External Financial Department) will review and reconcile with the already recorded budgetary data and prepare a Budget Data Adjustment Form to send to the State Treasury.

b) Based on the Budget Data Adjustment Form, the State Treasury will adjust the budgetary accounting data and send copies of the Budget Data Adjustment Form to the managing agency and the project owner to adjust corresponding accounting records and final accounts for foreign capital.

Chapter VII

ALLOCATION OF MATCHING FUNDS AND MECHANISMS FOR ADVANCE FUNDS FROM THE STATE BUDGETMECHANISM FOR ADVANCE FUNDS FROM THE STATE BUDGET

Article 21. Responsibility for Allocating Matching Funds

1. The central government budget allocates matching funds for projects/sub-projects funded directly from the central government budget according to the State Budget Law and managed and implemented by central agencies as project owners/sub-project owners. The Ministry of Planning and Investment and the Ministry of Finance are responsible for timely and full allocation of matching funds from each source of the state budget (construction investment, administrative and public services) in the annual capital plan, as specifically assigned in Decree No. 38/2013/NĐ-CP dated April 23, 2013 of the Government.

2. Local government budgets allocate matching funds for:

a) Projects/sub-projects under local government spending responsibilities according to the State Budget Law and managed and implemented by local agencies as project owners/sub-project owners.

b) Projects where provincial People's Committees borrow ODA and preferential government loans.

3. Financial credit organizations and enterprises of all economic sectors are responsible for allocating matching funds for:

a) Projects/sub-projects managed and implemented by financial credit organizations and enterprises as project owners/sub-project owners.

b) Projects/sub-projects where financial credit organizations and enterprises borrow ODA and preferential government loans.

4. Beneficiaries are responsible for contributing their share of matching funds (in cash, in kind, or labor) according to the design of each program or project.

Article 22. Mechanism for Advance Funding

Advance funding from the state budget (central budget) to implement certain components of programs/projects funded directly from the state budget, in cases where ODA and preferential loans have been committed and recorded in the state budget estimate for the year decided by the National Assembly but the funds have not yet been withdrawn, as stipulated in Article 44 of Decree No. 38/2013/NĐ-CP dated April 23, 2013 of the Government:

Based on the proposal of the managing agency, the Ministry of Planning and Investment, in coordination with the Ministry of Finance, will examine and decide on advance funding from the state budget to implement the program/project. This advance funding must be recovered and repaid to the state budget immediately upon disbursement of ODA and preferential loans from donors.

Chapter VIII

ORGANIZATION FOR LOAN REFINANCING

Article 23. Repayment Loan Procedures

1. Signing of Repayment Loan Contracts/Agreements:

a) The Ministry of Finance directly provides repayment loans to financial and credit organizations (in cases of repayment loan limits/credit components where the financial and credit organizations bear credit risks) or to project owners and enterprises under all economic sectors (in cases of repayment loans for specific investment programs/projects, excluding loans to production households and individuals), through signing Repayment Loan Agreements or Sub-loan Agreements between the Ministry of Finance and these organizations or units.

b) The Ministry of Finance directly provides repayment loans to provincial People's Committees, through signing Repayment Loan Agreement Records or Sub-loan Agreements between the Ministry of Finance and provincial People's Committees.

The Repayment Loan Agreement Record or Sub-loan Agreement mentioned in points a) and b) above shall be established for each specific repayment loan program/project and according to a unified model with the financier (if applicable).

c) The Ministry of Finance authorizes financial and credit organizations to act as Repayment Loan Agencies to implement specific investment programs/projects (in cases where financial and credit organizations do not bear credit risks), through signing Repayment Loan Authorization Contracts between the Ministry of Finance and the Repayment Loan Agency.

The Repayment Loan Authorization Contract is established according to the Model Repayment Loan Authorization Contract stipulated in Appendix 2 of Decree No. 78/2010/NĐ-CP dated July 14, 2010 of the Government.

2. Establishing Repayment Loan Recovery Plans:

a) For direct repayment loans provided by the Ministry of Finance: The Ministry of Finance determines the repayment recovery plan, quarterly and annual repayment fee collection plans for repayment loans based on the provisions in signed Repayment Loan Agreements or Sub-loan Agreements.

b) For repayment loans recovered by the Repayment Loan Agency authorized by the Ministry of Finance: The Repayment Loan Agency is responsible for establishing the repayment loan capital recovery plan, quarterly and annual repayment fee collection plans based on the provisions in signed Repayment Loan Authorization Contracts, and submitting them to the Ministry of Finance for consolidation.

3. Organizing Repayment Loan Recovery Work:

a) Repayment Account: Repayment loan recoveries (principal, interest, repayment loan fees) are directly refunded into the foreign currency and Vietnamese Dong transaction accounts of the Debt Repayment Reserve Fund opened at the State Treasury Exchange.

b) Annually in June and December, agencies, organizations, enterprises, and provincial People's Committees that are direct borrowers of foreign government loans are responsible for reporting and reconciling repayment data for repayment loan programs/projects with the Ministry of Finance (Debt Repayment Reserve Fund).

c) The Repayment Loan Agency is responsible for reporting the implementation status of repayment loan capital recovery plans, quarterly and annual repayment fee collection plans, and repayment of the Debt Repayment Reserve Fund according to each repayment loan program/project to the Ministry of Finance (Debt Repayment Reserve Fund). The reporting deadline is the 15th day of the first month of the next quarter for quarterly reports and before January 31 of the following year for annual reports. Annual reports on the recovery of repayment loan principal and interest and repayment fees, prepared and consolidated by the Repayment Loan Agency according to each repayment loan program/project, serve as the basis for the Ministry of Finance (Debt Repayment Reserve Fund) to reconcile and confirm annual repayment recovery figures with the Repayment Loan Agency.

Article 24. Handling Risks for Rescheduled Loans

The procedures, formalities, and authority to handle risks for rescheduled loans are specifically stipulated in Article 23 of Decree No. 78/2010/NĐ-CP dated July 14, 2010, of the Government.

The supervisory body shall cooperate with the Ministry of Finance and the rescheduling agency in evaluating, ranking, and classifying risky debts according to the regulations set forth in the Management and Risk Handling Regulations for Public Debt issued together with Decision No. 56/2012/QĐ-TTg dated December 21, 2012, of the Prime Minister.

Chapter IX

ACCOUNTING SYSTEM, AUDITING, REPORTING, AND INSPECTION REGIME

Article 25. Accounting for ODA Projects and Preferential Loans

1. Accounting Principles:

Units utilizing ODA funds and preferential loans must ensure compliance with:

a) The provisions of the Accounting Law, Vietnamese Accounting Standards, and current accounting systems in Vietnam;

b) The accounting regulations of the funding provider as stipulated in the loan agreement, financing agreement, or project documentation (if applicable).

2. Organizational Structure of Accounting Departments:

Depending on the scale of the project and the management form, appropriate organizational structures for accounting departments should be established.

a) In cases where a Project Management Board is not established, or if it is established but does not have its own accounting department: the project owner may utilize the existing accounting department and unified accounting system of the unit, with the unit's accountant concurrently serving as the project accountant to perform accounting tasks for the project, but must maintain separate accounts, sources of funds, and income and expenditure items for the project.

b) In cases where the project has a large scale and a Project Management Board (with independent legal status and its own seal) is established: the Project Management Board decides to establish a separate Accounting Department or Section and appoints an Accounting Director (or hires an Accounting Director) or an Accounting Officer in accordance with current regulations.

3. Applicable Accounting System:

a) For cases stipulated in point a), Clause 2 of this Article: apply the accounting system currently used by the implementing unit (enterprise accounting system, state-owned enterprise accounting system, or other suitable accounting system).

b) For cases stipulated in point b), Clause 2 of this Article: based on the nature of fund usage, project management form, and type of fund-utilizing entity, apply an appropriate accounting system.

Article 26. Audit of Financial Statements

1. Annual financial statement audit of ODA projects and preferential loans aims to verify and confirm the truthfulness and reasonableness of the project's financial statements for a fiscal year.

2. Annual financial statements of projects funded by ODA and preferential loans must be audited by the State Audit Agency or an independent auditor as agreed with the funding provider. If the ODA-funded or preferentially loaned project is included in the annual audit plan of the State Audit Agency and approved by the funding provider, then an independent audit is not mandatory for that year.

3. The audit of financial statements must comply with current laws and regulations, except where agreements between the Government and the funding provider provide otherwise.

4. Auditing firms selected to conduct audits of projects are independent auditing firms legally operating in Vietnam, licensed by the Ministry of Finance to engage in auditing services.

5. If the funding provider specifies, they may require the hiring of an independent auditor to audit financial statements for individual construction works, projects, or completed tasks.

6. The project owner is responsible for submitting the independent auditor's audit report on the project's annual financial statements to the State Audit Agency.

Article 27. Settlement

1. Annual settlement:

a) Projects using ODA funds and preferential loans for public services shall be settled annually in accordance with Circular No. 01/2007/TT-BTC dated January 2, 2007, issued by the Ministry of Finance, guiding the examination, verification, and notification of annual settlement for administrative agencies, public service units, organizations supported by the state budget, and budgets at all levels, and any supplementary, amended, or replacement circulars.

b) Investment construction projects using ODA funds and preferential loans shall be settled annually in accordance with Circular No. 210/2010/TT-BTC dated December 20, 2010, issued by the Ministry of Finance, regarding the settlement of investment capital for basic construction from the state budget according to the fiscal year and any supplementary, amended, or replacement circulars.

2. Project completion settlement:

a) Investment projects using ODA funds and preferential loans must complete project settlement upon completion in accordance with Circular No. 19/2011/TT-BTC dated February 14, 2011, issued by the Ministry of Finance, concerning the settlement of completed projects from state funds, and any supplementary, amended, or replacement circulars.

b) For projects that cease operations or have been dissolved or merged within the fiscal year, the project director and accounting officer must be responsible for completing the project settlement up to the point of cessation, dissolution, or merger before being transferred to other duties and bear legal responsibility for any violations during their tenure.

c) For programs/projects consisting of multiple independent component projects, the project leader shall process the approval for component project settlement as prescribed and submit the results to the program/project management authority for consolidation and reporting of the overall program settlement.

Article 28. Report on Fund Disbursement

1. The project leader shall prepare and submit to the Ministry of Finance a statement of foreign loan withdrawals according to the model in Appendix 1 of this Circular when processing foreign loan withdrawals in the forms prescribed in Article 15 of this Circular, serving as the basis for recording government budget revenues and expenditures.

2. The project leader shall submit a final fund disbursement report for the program/project to the Ministry of Finance within thirty days from the date of loan repayment or grant disbursement, detailed according to the model specified in Appendix 2 of this Circular, serving as the basis for project settlement.

3. The project leader shall prepare and submit financial reports to the financier in accordance with the project documentation, loan agreements, or grant agreements signed, and simultaneously send them to the supervising authority and the same-level finance department for timely monitoring and directing financial management of the project.

4. The supervising authority has the responsibility to prepare, consolidate, and provide to the Ministry of Finance reports on public debt every six months and annually, according to the form prescribed in Circular No. 53/2011/TT-BTC dated April 27, 2011, issued by the Ministry of Finance, guiding the format of public debt and external national debt information reporting and disclosure.

Article 29. Inspection

Financial authorities at all levels and project supervising authorities may independently or in coordination with relevant agencies conduct regular or spot inspections of projects using ODA funds and foreign preferential loans regarding compliance with financial management regulations stipulated in this Circular.

Chapter X

OTHER PROVISIONS

Article 30. Management of Assets

The management, use, and disposal of assets invested in and equipped from projects funded by ODA sources and preferential loans from sponsors shall be carried out in accordance with the regulations of the Prime Minister and the guidelines of the Ministry of Finance on the management and use of assets of state-funded projects currently in effect.

Article 31. Tax Policy

1. The tax policy for programs and projects using ODA funds and preferential loans from sponsors shall be implemented according to specific guidelines issued by the Ministry of Finance.

2. The tax policy applicable to programs and projects of the private economic sector using ODA funds and foreign preferential loans from sponsors: The managing agency of the program or project with the aim of supporting the private economic sector, financial and credit organizations lending again the program, credit limits for the private economic sector, or the competent authority allowing the private economic sector to access ODA funds and foreign preferential loans from the government shall have the responsibility to notify or confirm the form of ODA funding and preferential loans for each specific program or project to the tax authority to apply tax policies for programs and projects using ODA funds and preferential loans from sponsors in the private economic sector.

Article 32. Financial Management Handbook

In addition to the provisions of this Circular, the Ministry of Finance will cooperate with sponsors (if requested) to publish Financial Management Handbooks. These handbooks are reference materials on specialized professional matters and are intended to support organizations and individuals involved in managing and implementing ODA-funded and preferential loan projects.

Chapter XI

IMPLEMENTATION

Article 33. Effective Date

2. During its implementation, if the regulatory documents cited for application in this Circular are amended, supplemented, or replaced by new documents, then the new documents shall apply.

3. During implementation, if there are difficulties or issues not addressed in this Circular, relevant agencies and units are advised to promptly report to the Ministry of Finance for guidance and coordination in resolving them./.