Decree No. 24/2016/ND-CP on the regime for managing state treasury funds

DECREE

Regulations on State Treasury Management System

||| Pursuant to the Law on Organization of the Government dated June 19, 2015;

Pursuant to the State Budget Law dated June 25, 2015;

Pursuant to the Law on Public Debt Management dated June 17, 2009;

Pursuant to the Law on the State Bank of Vietnam dated June 16, 2010;

The Law on Credit Institutions dated June 29, 2010;

At the proposal of the Minister of Finance,

The Government issues this Decree stipulating the regulations on state treasury management system.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Decree stipulates the principles of state treasury management system; the operations of state treasury management within the National Treasury System; the tasks and authorities of relevant agencies and units in managing the state treasury.

Article 2. Applicability

1. Ministries, ministerial-level agencies, and government agencies.

2. People's Committees of provinces and centrally governed cities.

3. Units within the National Treasury System.

4. Agencies, units, economic organizations, and individuals related to state treasury management work.

1. The state treasury management system includes regulations on state treasury management, comprising regulations on the principles of state treasury management; operations of state treasury management (operations concerning organization of payment, forecasting cash flow and formulating plans for state treasury management to centrally and uniformly manage all sources of revenue, timely meeting the needs of budget expenditure and transactions with the National Treasury; mobilizing short-term capital, utilizing idle funds to ensure safety and efficiency; risk management; management of income and expenditure from state treasury management activities); tasks and authorities of agencies and units in managing the state treasury.

2. Liquidity safety means that state treasury funds can fully and promptly meet the needs of budget expenditure and transactions with the National Treasury at any time.

3. Safety in the use of temporarily idle state treasury funds means that such funds are used for their intended purposes as prescribed and can be fully recovered when due (including both principal and interest).

6. Risk management in state treasury management activities involves identifying types of risks, assessing risks, and applying preventive methods for potential risks in state treasury management activities.

7. Limit on the use of state treasury funds refers to the maximum level of use of state treasury funds for specific areas as prescribed by competent state agencies to ensure the safety of state treasury management activities.

Cash flow forecasting involves compiling and determining the expected receipts, expected payments, and the expected difference between receipts and payments of state treasury funds on a monthly, quarterly, and annual basis.

1. Implement centralized and unified management of the State Treasury throughout the entire National Treasury system.

2. Promptly centralize all sources of revenue to fully and timely meet the payment and disbursement needs of the state budget and transaction units at the National Treasury in accordance with regulations.

3. The management of the State Treasury must always ensure safety and effectiveness; link the management of the State Treasury with the management of the state budget and public debt, ensuring the ability to pay government debts.

Chapter II

STATE TREASURY MANAGEMENT OPERATIONS

Article 5. Scheme for Managing the State Treasury

1. The management of the State Treasury shall be carried out according to the quarterly and annual State Treasury management scheme approved by the Ministry of Finance. The State Treasury management scheme includes the following main contents:

a) Forecasting revenues, forecasting expenditures, and determining the temporary idle or insufficient State Treasury funds in the quarter or year.

b) Forecasting the usage limit of temporary idle State Treasury funds (if any) for specific entities.

c) Measures to handle temporary insufficient State Treasury funds (if any).

d) Determining the minimum balance of the State Treasury funds for the quarter.

For the annual State Treasury management scheme, the National Treasury is responsible for building and submitting to the Ministry of Finance before the twentieth day of December of the previous year; the Ministry of Finance approves it before the first day of January of the following year.

Article 6. Cash Flow Forecasting

1. Revenue cash flow forecasting includes: Forecasting revenues and borrowings of the state budget; forecasting revenues of transaction units with accounts at the National Treasury occurring during the forecast period; amounts due for recovery of temporarily idle State Treasury funds.

2. Expenditure cash flow forecasting includes: Forecasting expenditures and repayments of borrowings of the state budget; forecasting expenditures of transaction units with accounts at the National Treasury occurring during the forecast period; amounts due for repayment of borrowings to offset temporarily insufficient State Treasury funds.

3. Determine the temporary idle or insufficient State Treasury funds during the forecast period.

1. Temporarily idle State Treasury funds shall be utilized in the following priority order:

a) Advance payment for the central government budget.

b) Advance payment for provincial government budgets.

c) Depositing temporarily idle State Treasury funds with commercial banks with high safety levels as ranked by the State Bank of Vietnam; prioritizing banks with higher safety, better liquidity, and higher interest rates.

d) Purchasing government bonds with maturity.

2. Usage period of temporarily idle State Treasury funds:

a) Not exceeding one year for advance payments to the central government budget and provincial government budgets using temporarily idle State Treasury funds. In cases where the central government budget or provincial government budgets face difficulties and revenues do not meet planned expenditure requirements, advance payments may be extended for up to one year; such extensions are decided by the Minister of Finance based on the National Treasury's proposal, ensuring compliance with principles similar to those for new advance payments.

b) Not exceeding three months for the utilization of temporarily idle State Treasury funds as stipulated in Points c and d of Clause 1 of this Article.

3. Authority to decide on the utilization of temporarily idle State Treasury funds:

a) The Minister of Finance decides on advance payments to the central government budget and provincial government budgets as stipulated in Points a and b of Clause 1 of this Article. Every six months, the Ministry of Finance reports to the Prime Minister on the situation of advance payments from the State Treasury to the state budget.

b) The Director General of the National Treasury decides on the utilization of temporarily idle State Treasury funds as stipulated in Points c and d of Clause 1 of this Article.

Article 8. Measures to address temporary shortfalls in the state treasury

a) Issuing Treasury bills to cover temporary shortfalls in the state treasury in accordance with Clause 2 of this Article.

b) Recovering prematurely the amounts deposited with commercial banks under fixed-term deposits.

2. The amount borrowed to cover temporary shortfalls in the state treasury shall be recorded separately and not included in the budget deficit of the state. Interest payments on borrowed funds to cover temporary shortfalls in the state treasury shall be included in the operational expenses for managing the state treasury; such interest payments shall not be disbursed from the state budget.

3. The issuance of Treasury bills to cover temporary shortfalls in the state treasury shall have maximum terms not exceeding three months. The procedures and formalities for issuing Treasury bills to cover temporary shortfalls in the state treasury shall be carried out in accordance with current regulations governing the issuance of government bonds. In particular:

a) All proceeds from the issuance of Treasury bills to cover temporary shortfalls in the state treasury shall be used to ensure the liquidity of the State Treasury.

b) The State Treasury shall manage and utilize the capital raised from the issuance of Treasury bills to cover temporary shortfalls in the state treasury; allocate resources to fully and timely repay debts (principal and interest).

c) Any costs incurred during the issuance and settlement of Treasury bills to cover temporary shortfalls in the state treasury shall be considered operational expenses for managing the state treasury. The level of fees paid shall be implemented according to the auction fees for Treasury bills through the State Bank of Vietnam.

4. The Director-General of the State Treasury shall decide on measures to address temporary shortfalls in the state treasury as stipulated in Clause 1 of this Article.

Article 9. Risk Management in State Treasury Management Activities

1. Risks in state treasury management activities include:

a) Payment risk: This is the risk arising when state treasury revenue does not meet the requirements for state treasury expenditures; or due to temporarily idle state treasury funds as prescribed in Article 7 of this Decree not having reached their maturity date for recovery; or loans and Treasury bill issuances are insufficient to ensure state treasury expenditure tasks.

b) Risk in the utilization of state treasury funds: This is the risk arising when temporarily idle state treasury funds as prescribed in Article 7 of this Decree cannot be recovered promptly and fully (principal and interest) upon maturity; or due to adverse fluctuations in market interest rates or foreign exchange rates.

c) Other risks: These are risks arising from inaccurate assessments of temporarily idle state treasury funds or temporary shortfalls in the state treasury; or due to disruptions in information technology systems; or due to other force majeure events.

2. The State Treasury shall assess risks to:

a) Identify risks and evaluate the impact of risks on state treasury management activities.

b) Risk assessment shall be conducted regularly on a monthly, quarterly, and annual basis to implement appropriate management measures for the state treasury and to prevent risks; simultaneously, periodic reports shall be submitted to the Ministry of Finance to provide timely guidance to ensure the safety of state treasury management activities.

a) Setting limits on advance appropriations of state treasury funds for the central budget.

b) Setting limits on advance appropriations of state treasury funds for provincial budgets; wherein, the limit for each provincial budget must ensure that the total outstanding advances and other outstanding borrowings of the provincial budget do not exceed the maximum borrowing limit allowed under the State Budget Law for that provincial budget.

c) Setting limits on the use of temporarily idle state treasury funds for fixed-term deposits at commercial banks.

d) Setting limits on the use of temporarily idle state treasury funds for purchasing fixed-term government bonds.

đ) Determining the minimum balance of state treasury funds that the State Treasury must maintain on the centralized payment account to ensure the safety of payment and disbursement capabilities for the state budget and transaction units.

4. The State Treasury shall implement comprehensive measures to minimize and prevent risks in state treasury management, specifically:

a) Only using temporarily idle state treasury funds for purposes specified in Clause 1 of Article 7 of this Decree; while adhering to the limits set forth in Clause 3 of this Article.

b) The State Treasury shall conduct internal audits and supervision in accordance with the established procedures for state treasury management after approval by the Ministry of Finance.

c) Building and developing information technology infrastructure to ensure the safety and compliance with regulations in state treasury management.

d) Implementing other measures to reduce and prevent risks.

1. The centralized payment accounts of the State Treasury include:

a) The centralized payment accounts of the State Treasury at the State Bank of Vietnam, including one consolidated payment account at the Trading Center of the State Bank of Vietnam and other payment accounts at the provincial branches of the State Bank of Vietnam (if any).

b) The centralized payment accounts of the State Treasury at commercial banking systems, including one consolidated payment account at the central level and other payment accounts at the commercial bank branches under each commercial banking system.

2. The centralized payment accounts of the State Treasury at the State Bank of Vietnam or commercial banks are used to collect and disburse state funds and to conduct transactions related to the temporary idle or borrowed state funds to make up for temporary shortages.

3. At the end of the day, the balances of receipts and payments on the payment accounts of local treasuries are concentrated into the consolidated payment accounts of the State Treasury, specifically:

a) Payment accounts opened at the provincial branches of the State Bank of Vietnam (if any) are concentrated into the consolidated payment account of the State Treasury at the Trading Center of the State Bank of Vietnam.

b) Payment accounts opened at commercial bank branches are concentrated into the consolidated payment account of the State Treasury at the same commercial banking system.

4. The end-of-day balance of the centralized payment accounts of the State Treasury:

a) At the State Bank of Vietnam is paid interest at the rate prescribed by the Governor of the State Bank of Vietnam, which shall not be lower than the interest rate that the State Bank of Vietnam pays to credit organizations during the same period.

b) At commercial banks is paid interest at the agreed rate between the State Treasury and commercial banks, in accordance with the provisions of the law.

Article 11. Opening Accounts, Paying Interest, and Charging Fees

1. The entities opening accounts at the State Treasury include:

a) National budget funds, national financial reserve funds.

b) Units using state budget funds, project sponsors, project management boards, and organizations regularly supported by the state budget must open accounts at the State Treasury in accordance with the State Budget Law to conduct transactions and payments.

c) Authorities authorized to open temporary collection and holding accounts; budgetary units open deposit accounts.

d) National financial funds and other economic units and organizations may open deposit accounts at the State Treasury in accordance with the law.

a) Entities entitled to interest from the State Treasury include: central and provincial government financial reserves; national financial funds deposited at the State Treasury; money of units and organizations without origin from the state budget deposited at the State Treasury.

The interest rate is implemented at the rate that the State Bank of Vietnam pays to the State Treasury at the time of interest calculation.

b) Entities not entitled to interest from the State Treasury include: remaining budget funds at various levels and deposits of units and organizations with origin from the state budget.

a) Entities required to pay payment fees include: money of units and organizations without origin from the state budget deposited at the State Treasury.

The payment fee is implemented at the rate charged by the bank to the State Treasury at the time of fee calculation.

b) Entities not required to pay payment fees include: state budget payments; central and provincial government financial reserves; national financial funds and deposits of units and organizations with origin from the state budget at the State Treasury.

Article 12. Revenue and Expenditure from State Treasury Management Activities

1. Revenues from state treasury management activities include:

a) Interest income from activities using state funds; 

c) Other revenues (if any) as prescribed by law.

2. Expenditures for state treasury management activities include:

a) Payment of interest and other costs incurred during the issuance and settlement of loans to cover temporary shortfalls in state funds; 

c) Payment of interest to funds and deposits of units and economic organizations at the State Treasury.

Chapter III

TASKS AND LIMITATIONS IN

STATE TREASURY MANAGEMENT ACTIVITIES

2. Approving plans for managing state treasury operations on a quarterly and annual basis upon the proposal of the State Treasury.

4. Directing, managing, supervising, inspecting, and auditing state treasury management activities at the State Treasury in accordance with the law.

5. Providing timely information to the State Bank of Vietnam under the coordination regulations between the Ministry of Finance and the State Bank of Vietnam.

Article 14. Tasks and Authorities of the State Bank of Vietnam

1. Opening accounts for the State Treasury in accordance with the State Budget Law and this Decree; simultaneously, executing all valid payment orders of the State Treasury. 

2. Paying interest on the balance of the State Treasury's account at the State Bank of Vietnam as prescribed in this Decree and charging fees for the State Treasury's payment transactions as prescribed by the Governor of the State Bank of Vietnam during each period.

Article 15. Tasks and Authorities of Ministries, Sectors, and Localities

1. Directing subordinate units to strictly comply with the system of providing and submitting information and data on state budget revenues and expenditures and the revenues and expenditures of units with accounts at the State Treasury as stipulated in Article 18 of this Decree.

1. Issuing operational procedures and implementing necessary technical measures to manage state funds.

2. Directly managing state funds centrally and uniformly nationwide to meet the full and timely needs for payment and disbursement of the state budget and transaction units.

3. Deciding on the use of temporarily idle state funds and measures to address temporary shortfalls in state funds as prescribed in Articles 7, 8, and 9 of this Decree.

4. Organizing internal inspections and audits; operating information technology systems and related activities to ensure safe and effective management of state funds.

1. Open accounts for the State Treasury in accordance with the State Budget Law and the guidance provided in this Decree.

2. Coordinate with the State Treasury to implement state treasury management operations to quickly centralize revenue, fully and promptly meet state treasury disbursement requirements; implement interest payments on the balance of the State Treasury's account in accordance with this Decree and charge payment fees to the State Treasury in accordance with regulations of the State Bank of Vietnam.

Article 18. Duties and powers of units transacting with the State Treasury

1. Units transacting are responsible for providing and timely submitting to the State Treasury information and data as prescribed by the Ministry of Finance to serve cash flow forecasting.

2. Units transacting may request the State Treasury to fully and promptly meet payment and disbursement needs in accordance with the State Budget Law and guiding documents of the Law.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 19. Effectiveness and Implementation Organization

1. This Decree takes effect from January 1, 2017.

2. The Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, and Chairpersons of provincial People's Committees directly under the central government shall be responsible for implementing this Decree./.