Circular No. 22/TC-VT guiding the state financial management regime for official development assistance (ODA) sources.

CIRCULAR

MINISTRY OF FINANCE DECREE NO. 22/TC-TCT ON MARCH 20, 1995

GUIDELINES FOR THE MANAGEMENT OF STATE FINANCES

IN RELATION TO OFFICIAL DEVELOPMENT ASSISTANCE FUNDS

The Government has issued Decree No. 20/CP on March 15, 1994 regarding the Regulations on Management and Utilization of Official Development Assistance Funds, and Decree No. 177/CP on October 20, 1994 concerning the Charter for Investment and Construction Management. Official Development Assistance funds provided in the form of repayable support shall be implemented according to the Regulations on Foreign Borrowing and Debt Repayment issued together with Decree No. 58-CP on August 30, 1993 of the Government, and Circulars guiding Nos. 17/TC-TCĐN and 18 TC/TCĐN dated March 5, 1994 of the Ministry of Finance. For Official Development Assistance funds provided in the form of non-repayable aid, the Ministry of Finance provides guidance as follows:

I/ PRINCIPLES GENERAL:

1. Foreign Official Development Assistance (ODA) funds for our country are part of state budget revenue, must be planned, fully reflected in the State Budget, and managed under the current state budget management system.

2. Non-repayable ODA funds can be utilized in the form of state budget capital disbursement or state credit.

The form of state budget capital disbursement (capital for construction investment or operating expenses) mainly focuses on economic and social programs and projects within the scope of responsibilities of the state budget.

ODA funds for projects and works that have the potential for repayment will be re-lent by the State through the General Department of Investment and Development under the Ministry of Finance or banks designated by the Government. The financial mechanism for re-lending will be determined specifically by the Ministry of Finance in consultation with relevant agencies to suit the production and business characteristics of each entity.

3. The Ministry of Finance is responsible for uniformly managing state finances for all ODA sources, from participating in the formulation of policies on the use of ODA and project approval, allocating investment capital for projects, researching and proposing financial management mechanisms, implementing payments through the state budget, managing the entire process of using funds, inspecting, and settling accounts for projects.

The Directors of Provincial Departments of Finance and Prices under centrally administered cities are responsible for assisting the Minister of Finance and the People's Committees of provinces and cities in managing finances for ODA sources directly allocated to localities and distributed by central ministries and sectors to localities.

4. Heads of ministries and sectors, Chairmen of provincial and municipal people's committees, chairpersons of associations and mass organizations bear responsibility under the law for managing finances and using ODA funds effectively for programs and projects within their jurisdiction.

5. Program managers, project directors, and investors using ODA funds must ensure compliance with the objectives, targets, and other commitments recorded in each program and project; they are responsible for fully and timely repaying the state budget for borrowed amounts according to regulations, strictly adhering to financial systems, Accounting and Statistics Ordinance, organizational accounting charters, and current accounting and auditing systems of the state.

II/ SPECIFIC PROVISIONS

A/ Planning:

Annually, based on commitment documents or agreements; based on plans to implement programs and projects; notifications on aid distribution from the competent authority to units; based on the implementation of projects in the year, units prepare plans for the collection and utilization of ODA funds together with their economic, financial, and budget plans and submit them to the project management authority and the same-level finance agency (projects under ministries send to the ministry in charge and the Ministry of Finance; projects where provinces and cities are the main project authorities send to the provincial finance and price department).

Central ministries and sectors and provincial finance and price departments are responsible for consolidating these plans together with their annual financial and state budget plans and reporting to the Ministry of Finance for consolidation and submission to the Government for approval by the National Assembly. năm của mình, báo cáo gửi Bộ Tài chính để Bộ Tài chính tổng hợp báo cáo trình Chính phủ phê duyệt trước Quốc hội.

Plans for the collection and utilization of ODA funds must clearly explain the following contents:

- The plan for the value (foreign currency and converted to Vietnamese dong) to be received and used. Specifically calculated for each type of goods and currency, divided according to purposes and target users.

- The plan for domestic counterpart funds participating in the project (if any), categorized by goals and types of funds (construction investment, public services...).

- Costs for project establishment and management, including all costs from project establishment to receipt, transportation, storage of goods and equipment, project management costs...and the source of funding for this work. For projects in the production and business sector, the project leader uses own capital or borrowed capital. For projects in the administrative and public service sector or construction works funded by the state budget, the project leader must prepare the plan together with their state budget expenditure plan.

B/ Implementation of receipt and management:

There are many forms and methods of transferring ODA, each country or organization has its own rules, procedures, and objectives. Therefore, based on the content of signed documents with countries and organizations providing aid, the Ministry of Finance will submit to the Government for approval of the financial mechanism and provide specific guidelines for each type of ODA.

1/ Confirmation of Aid:

- All foreign aid money and goods brought into the country for use (including when the foreign side purchases goods domestically and then transfers them to the user unit) must have an aid confirmation certificate.

- The entities required to issue an aid confirmation certificate are units and project leaders receiving foreign aid money and goods.

In cases where the foreign side purchases goods domestically, the project leader must complete the confirmation procedures within 30 days of receiving the goods.

- Upon receipt of notification of aid money or goods, units must immediately go to the International Aid Management and Reception Board under the Ministry of Finance (or the Management and Reception Board at Ho Chi Minh City and Da Nang) to complete the aid confirmation procedures.

- The aid confirmation certificate for money or goods is the basis for completing the procedures for receiving goods, withdrawing money, and settling accounts with the state budget. The aid confirmation certificate for money and goods is uniformly issued by the Ministry of Finance.

2/ Necessary documents for confirming aid :

At the end of the accounting period, determine the difference between the sales volume of foreign exchange sold ( For goods:

- Approval documents for programs and projects by authorized agencies.

- Project documents, programs, Agreements, Decrees, or other officially signed agreements with foreign partners clearly stating the list and value of approved goods.

- Commercial contract approval document in accordance with current regulations.

- Bill of Lading for sea transport or Airway Bill for air transport.

- Detailed packing list.

- Commercial invoice.

- Insurance certificate.

b- For grants:

- Approval documents for programs and projects by authorized agencies.

- Project documents, programs, Agreements, Decrees, or other officially signed agreements with attached appendices clearly stating the amounts of foreign currency or domestic currency according to the budget items of the program or project.

- Detailed plan explanation for using grant funds and notification from the Bank or transfer notice from abroad regarding the received amount.

c- Cases requiring additional documentation:

+ For long-term national programs, there must be annually signed official documents with specific provisions on the list and quantity of goods or monetary amounts as mentioned above.

+ In cases where the signed documents do not clearly state the list of goods, the unit must provide a detailed explanation of the quantity, weight, or value of the aid goods within the total project budget and must be confirmed by the head of the managing authority. For restricted import goods, there must be a written agreement by the Prime Minister.

+ In cases of changes in the list or type of aid goods, or changes in the budget items of the project, there must be an approval document from the Prime Minister or an authorized agency.

+ In cases where goods or foreign currency aid are not included in the project, program, or signed documents, there must be a permission document from the Prime Minister, along with a clear explanation of the source and purpose of this amount.

+ In cases where a unit receives on behalf of multiple units, the receiving unit must have a specific distribution plan for each recipient and a power of attorney from the units that will use the aid.

+ In cases where the foreign party purchases goods domestically to deliver to the user unit, the unit must have the original invoice and warehouse release form issued by the seller, unified by the Ministry of Finance.

+ In cases where shipping documents, invoices, or item lists are not immediately available upon receipt (documents delayed), the unit must have a notification from the airport or transportation agency. At the latest, within 15 days from the date of confirmation, the unit must submit relevant documents related to the received shipment as stipulated above to the International Aid Management and Reception Office or the place that issued the confirmation.

3 - Receiving procedures:

To receive foreign currency and goods from domestic agencies, units must follow the following procedures:

- If receiving foreign currency:

+ Prepare a confirmation letter for the money

+ Go to the bank to present the confirmation letter to process the withdrawal

+ Report the actual receipt of money (foreign currency, Vietnamese dong) to the International Aid Management and Reception Board.

- If receiving goods from abroad:

+ Prepare a confirmation letter for aid goods

+ Apply for an import permit at the export-import permit department of the Ministry of Trade

+ Process customs formalities and receive the goods

+ Report the actual receipt of goods to the International Aid Management and Reception Board.

4) Payment through State Budget:

a- The confirmation letter for goods or money aid issued by the International Aid Management and Reception Board under the Ministry of Finance to the unit is an important document for payment through the State Budget.

b- The payment value through the State Budget is the value of the foreign currency of the goods or money received by the unit, converted into Vietnamese dong based on the buying rate published by the Foreign Trade Bank at the time of confirmation. For goods purchased by the foreign party domestically and delivered to the user unit, the payment value is the price stated on the invoice and warehouse release form.

In cases where the actual received goods differ in quantity or type, or the actual received money differs from the declared amount, within 45 days from the first confirmation date, the unit must send the inspection report (or report on the actual receipt of money) to the issuing aid confirmation agency for review and adjustment of the confirmation letter.

In cases where aid goods do not have a nominal value to convert into Vietnamese dong, the confirmation value will be temporarily calculated by the International Aid Management and Reception Board. Within 45 days from the date of issuance of the aid confirmation letter, the unit must send the revaluation report to the confirming agency for adjustment of the confirmation letter. A valuation committee established by the unit's managing authority, with the participation of representatives from the financial and pricing authorities at the same level, will conduct the revaluation. Beyond this period, if the unit does not send the revaluation report, the Ministry of Finance will consider the initial confirmation letter with the temporarily calculated value as a valid document for payment through the State Budget.

c- The Ministry of Finance (International Aid Management and Reception Board) will process payments through the State Budget for the value of goods and money received by units according to the following principles:

+ For amounts specified to be provided by the State Budget:

- Record State Budget revenue: Chapter 99A, Type 14, Clause 01,

Item 5 (or 6), Section 42.

- Record State Budget expenditure according to the chapter, type, clause, item of the unit and

purpose of use

+ For the clauses defined as the State lending again:

- Record the State budget according to the above regulations, while accounting for expenditures outside the budget for separate tracking. When recovering the loan, reduce the loan amount on the principal and record the State budget for the interest income.

5) Management and accounting:

a- During the usage period, units must timely and fully reflect all sources of funds and goods received on vouchers and accounting books in accordance with current State regulations under the Accounting and Statistics Ordinance and the current accounting system.

In cases where there is a change in the value of goods or aid funds, based on official adjustment notices from the aid confirmation agency or financial agencies, units shall perform adjustment entries for the value of received or used aid on their own books.

b- Financial management for the receipt and use of ODA sources (including foreign capital as well as domestic counterpart funds and project establishment and management costs) must be carried out strictly in accordance with current State financial management systems.

Management of ODA allocated in the form of basic construction capital from the State budget must comply with current State budget basic construction capital usage systems.

Management of ODA allocated in the form of public service capital must be implemented strictly in accordance with current State financial management systems for public service funds provided by the State budget.

In cases where ODA is received and used in the form of State budget loans, full investment procedures and loan repayment conditions as prescribed must be fulfilled.

The financial accounting departments of Ministries and sectors have the responsibility to assist the heads of Ministries and sectors in consolidating and managing finances for all foreign funding sources within their respective jurisdictions in accordance with current State financial management systems.

Financial agencies at all levels are responsible for inspecting and supervising the receipt and use of all foreign funding sources for projects within their financial management scope.

During the inspection and supervision process, it is necessary to firmly handle or promptly recommend to the Ministry of Finance and relevant legal agencies to deal with violations of financial management systems.

C- REPORTING, SETTLEMENT AND HANDOVER:

1. Each year, project leaders using ODA must prepare reports on the receipt and use of ODA and submit them to the project management agency and the financial management agency of the project (projects under central Ministries and sectors send to the Ministry of Finance (International Aid Reception and Management Department); projects managed by localities send to the Provincial Finance and Price Departments).

The project management agency has the responsibility to consolidate the overall situation of receipt and use of projects under its management and report to the corresponding level financial agency (in the Ministry of Finance, this is the department managing financial affairs of the sector).

Reports on the management and use of aid must include the following main contents:

+ Results of receiving ODA amounts (quantity, foreign currency value and converted Vietnamese dong value of each type).

+ Usage situation for each target and work according to the project's objectives.

+ Usage of funds for project establishment, reception and management.

+ Compliance with financial management systems.

+ Effectiveness and results of ODA use; related recommendations for handling.

2. Upon completion of the project:

- Project leaders are responsible for preparing final settlement reports on the receipt and use of ODA (including in the form of State budget allocation or lending); settle all project capital and funds for project establishment, reception and management. Submit to the project management agency and the corresponding level financial agency.

- The process and requirements for preparing final settlements, and the content of final settlement reports must follow current guidelines issued by the Ministry of Finance.

- In cases where the project is funded by multiple sources, the final settlement report must clearly analyze the receipt and use of each source of funding.

- In cases where the project is funded over several years, when settling, the project leader must base on the guidance of the Ministry of Construction to convert the invested capital according to the price level at the time of handover and operation commencement, serving as the basis for determining the value of assets handed over.

- If there is still surplus capital after the project ends, the project leader must immediately report to the project management agency and the project financial management agency. The financial agency is responsible for reviewing and determining the usage direction. Any use of this capital without approval documentation from the financial agency is a violation of the State budget expenditure management system and will be dealt with according to the Law.

- Before approving the final settlement of completed projects, auditing agencies must review and provide formal written opinions or conduct reviews according to current regulations: The Ministry of Finance (International Aid Reception and Management Department leading, with participation from the financial management department of the sector) is responsible for reviewing and providing written opinions before the competent authority approves for projects under central Ministries and sectors. The Provincial Finance and Price Departments are responsible for reviewing and providing written opinions for projects under local management.

- Approval of final settlement of completed projects must ensure compliance with current regulations of the Ministry of Finance.

3. The basis for handing over the financial aspects of completed projects put into use is the final settlement report of the project.

- For projects implemented in the form of State budget public service funding, the handover and acceptance for use are carried out according to the current system for using funds and assets provided by the State budget to administrative public service agencies.

- For projects implemented in the form of State budget basic construction capital: Handover and acceptance for use are carried out according to the current system for handing over basic construction capital provided by the State budget.

- For projects implemented in the form of State budget loans: The borrowing unit is responsible for arranging funds to repay the principal and interest to the State budget in accordance with the debt agreement.

III. IMPLEMENTATION PROVISIONS:

1. This Circular takes effect from the date of signature. Circular No. 45TC/VT dated August 15, 1991 of the Ministry of Finance is abolished.

2. Ministries, sectors, and localities are responsible for guiding and inspecting project leaders under their jurisdiction to implement this Circular.

3. During the implementation process, if there are any difficulties, the Ministries, sectors, localities, units, and project sponsors shall promptly reflect them to the Ministry of Finance (International Aid Management and Reception Board) for study and resolution.

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