Circular No. 26/2012/TT-BTC guiding the provision of interest rate differential subsidies for loans under the Public Passenger Bus Transport Investment Project in Ho Chi Minh City

CIRCULAR

Guidelines for compensating interest rate differential for loans

Public passenger transport vehicle investment project using buses

in Ho Chi Minh City

______________________________

Pursuant to the State Budget Law No. 01/2002/QH11 dated December 16, 2002;

Based on Decree No. 221/2013/NĐ-CP dated December 30, 2013 of the Government stipulating the system of applying administrative handling measures for placement in compulsory drug rehabilitation facilities (hereinafter referred to as Decree No. 221/2013/NĐ-CP);

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

Implementing Circular No. 1124/CP-CN dated August 21, 2003 of the Government Office on the Public Passenger Transport Vehicle Investment Project using buses in Ho Chi Minh City;

The Ministry of Finance guides the mechanism for compensating interest rate differential for the Public Passenger Transport Vehicle Investment Project using buses in Ho Chi Minh City as follows:

PART I. GENERAL PROVISIONS

Article 1. Scope of Application

This Circular provides guidelines for compensating interest rate differential for loans for the Public Passenger Transport Vehicle Investment Project using buses in Ho Chi Minh City (hereinafter referred to as the Project).

Article 2. Source of interest rate differential compensation

1. The Ho Chi Minh City budget (hereinafter referred to as the City Budget) will compensate the interest rate differential for loans for the Public Passenger Transport Vehicle Investment Project using buses in Ho Chi Minh City based on the actual loan interest rate with the preferential loan interest rate stipulated by the Prime Minister at 3% per year.

2. The source of interest rate differential compensation for the Project's loans shall be allocated from the central budget supplemented with specific targets for local budgets annually. The People's Committee of Ho Chi Minh City (hereinafter referred to as the People's Committee of the City) is responsible for approving and directly compensating the interest rate differential according to this Circular.

PART II. SPECIFIC PROVISIONS

Article 3. Building the plan for compensating interest rate differential

1. Before July 25 each year, based on the progress of implementing the Project, the loan plan, debt recovery plan, and anticipated loan interest rates for the planning year, the State Capital Investment Corporation of Ho Chi Minh City (hereinafter referred to as the Investment Corporation) shall build the plan for compensating interest rate differential for the planning year, report it to the Department of Finance of Ho Chi Minh City for consideration and consolidation within the city budget revenue and expenditure plan to submit to the People's Committee of the City and relevant authorities for approval in accordance with the State Budget Law.

2. Based on the Ho Chi Minh City budget plan for the planning year assigned by the Prime Minister, the People's Committee of the City shall submit the budget implementation plan for the planning year to the People's Council of the City for approval, including the task of compensating interest rate differential as prescribed.

3. Based on the Resolution of the People's Council of the City approving the local budget plan for the planning year, the People's Committee of the City shall decide to allocate the budget for compensating interest rate differential to the Investment Corporation.

Article 4. Method for calculating the plan for compensating interest rate differential

The annual plan for compensating interest rate differential is determined according to the following formula:

Where:

- Average outstanding loan balance for the planning year = (outstanding loan balance at the beginning of the planning year + outstanding loan balance at the end of the planning year)/2.

- Loan interest rate for the planning year = the average arithmetic interest rate of twelve (12) months expected of four (04) banks (Vietcombank - Ho Chi Minh City Branch, VietinBank Transaction Center II, Agribank - Ho Chi Minh City Branch, and BIDV - Ho Chi Minh City Branch) operating in Ho Chi Minh City plus (+) management fee of 1.2% per year.

- Preferential loan interest rate for the Project as stipulated by the Prime Minister is 3% per year.

Article 5. Principles for Interest Rate Differential Compensation

1. The People's Committee of the City shall provide interest rate differential compensation to the Financial Investment Company. The amount of interest rate differential compensation is determined based on the actual interest rate differential and the actual average outstanding balance of the Project.

2. The interest rate differential compensation shall be provided temporarily every six months at a level equal to seventy-five percent (75%) of the interest rate differential that arises during the period. At the end of the fiscal year, based on the Financial Investment Company's report summarizing the interest rate differential compensation situation, the People's Committee of the City shall approve the official compensation amount for the year to adjust and supplement any shortfall (if any).

3. The schedule for allocating funds for interest rate differential compensation from the City Budget shall be consistent with the loan disbursement schedule of the Financial Investment Company and the repayment schedule of the Project's debt.

4. The duration for calculating interest rate differential compensation for each loan is the actual loan term within ten (10) years from the first capital disbursement date of the State-owned Financial Investment Company.

Article 6. Method for Calculating Actual Interest Rate Differential Compensation

The actual interest rate differential compensation amount for the period (six months, one year) is calculated according to the formula:

Determination method:

- Average actual outstanding loan balance in the period = Total monthly average outstanding balance / number of months with outstanding balance in the period.

In which: Monthly average outstanding balance = (outstanding balance at the beginning of the month + outstanding balance at the end of the month) / 2.

- Loan interest rate in the period = total arithmetic average deposit interest rate of four (04) commercial banks in Ho Chi Minh City mentioned in Article 4 of this Circular divided by the number of months in the period (six months, one year) plus management fee of 1.2% per year (management fee for six (06) months is 0.6%/6 months).

In which: Monthly average deposit interest rate = (deposit interest rate at the beginning of the month + deposit interest rate at the end of the month) / 2.

- The preferential loan interest rate for the Project is 3% per year. The preferential loan interest rate for six (06) months is determined by converting the annual preferential loan interest rate of 1.5% per six months..

Article 7. Procedures and Formalities for Interest Rate Differential Compensation

1. Temporary Interest Rate Differential Compensation for Six (06) Months

a) Before July 15th each year, based on data regarding loan disbursement, collection, outstanding balance, and interest rate differential compensation arising in the first six (06) months of the year, the Financial Investment Company shall submit a report and request the People's Committee of the City to provide interest rate differential compensation (report form according to Appendix No. 01 attached).

b) Based on the Financial Investment Company's request, the People's Committee of the City shall consider and decide on the interest rate differential compensation amount for six (06) months according to the principles stated in Article 5 of this Circular.

2. Year-end Settlement of Interest Rate Differential Compensation

a) At the end of the fiscal year, based on officially approved settlement data by the Board of Members, the Financial Investment Company shall determine the actual interest rate differential compensation amount for the entire year, submit a report and request the People's Committee of the City to provide interest rate differential compensation (report form according to Appendix No. 01 attached).

b) Based on the annual compensation plan allocated in the city budget estimate, the settlement report on interest rate differential compensation, the People's Committee of the City shall review, consider, and decide on the official compensation amount for the year, and make adjustments for the six (06) months' temporary compensation and supplement any remaining amount (if there is a shortfall).

Article 8. Allocation of Interest Rate Subsidy Amounts

Based on the subsidy amount for the period (six months, year) and the proportion of joint lending capital of credit organizations, the Financial Investment Company calculates and determines the interest rate subsidy level to be enjoyed by each unit and pays it to participating units.

Article 9Handling the Difference between Official Subsidy Amount and Budgeted Subsidy Plan

The difference between the official subsidy amount and the budgeted subsidy plan shall be handled as follows:

1. If the actual interest rate subsidy amount for the entire year exceeds the amount allocated in the announced interest rate subsidy plan in the city budget estimate, the People's Committee of the City will arrange funds to provide additional subsidies in the following year.

2. If the actual interest rate subsidy amount for the entire year is lower than the amount allocated in the announced interest rate subsidy plan in the city budget estimate, the difference will be transferred to the following year and included in the subsidy plan in the next year's budget estimate (if there is still a difference in the following year) or canceled according to the provisions of the State Budget Law and current guiding documents (in case there is no difference in the following year).

Article 10. Reporting, Settlement, and Audit

1. Before the last day of the second quarter, the Financial Investment Company reports to the People's Committee of the City and the Department of Finance of the City on the loan situation, debt collection, and the expected interest rate subsidy amount that will arise in the first two quarters of the year (report form according to Appendix No. 02 attached).

2. Not later than 90 days after the end of the fiscal year, the Financial Investment Company prepares a report on the settlement of the interest rate subsidy amount for the year, submitting it to the People's Committee of the City for approval in accordance with Clause 2, Article 7 of this Circular.

3. The interest rate subsidy is subject to state audit in accordance with the prescribed regulations.

Chapter III. IMPLEMENTATION ORGANIZATION

Article 11. Responsibilities of Related Organizations

1. The People's Committee of the City is responsible for:

a) Balancing and allocating city budget resources to subsidize interest rate differences for the Financial Investment Company and to subsidize the project investors for bus projects to repay loans according to schedule.

b) Directing the Financial Investment Company to develop plans and approve the interest rate subsidy amount for the year in accordance with this Circular.

c) Approving annual settlements and subsidies for the Financial Investment Company based on the city budget balance.

d) Upon completion of the Project (in 2013), compiling and evaluating the results of the Project to report to the Prime Minister, simultaneously sending to the Ministry of Finance and the Ministry of Planning and Investment.

2. The Financial Investment Company is responsible for:

a) Developing the annual interest rate subsidy plan and submitting it to the People's Committee of the City for approval;

b) Organizing itself as the main entity for joint lending in accordance with the Project regulations and being responsible for its own lending activities.

c) Compiling and reporting the interest rate subsidy situation to the People's Committee of the City for approval and being responsible for the accuracy and honesty of the data related to the Project.

d) Receiving the interest rate subsidy capital from the city budget and distributing it to participating lending organizations according to each unit's joint lending ratio.

e) Upon completion of the Project (in 2013), compiling and evaluating the Project implementation results and reporting to the People's Committee of the City.

Article 12. Implementation Provisions

1. This Circular takes effect from April 12, 2012, and applies until the Project ends. This Circular replaces Circular No. 111/2003/TT-BTC dated November 17, 2003, and Circular No. 91/2004/TT-BTC dated September 13, 2004, issued by the Ministry of Finance, guiding the interest rate subsidy for loans for public passenger transport vehicle investment projects using buses in Ho Chi Minh City.

2. The settlement of the interest rate subsidy for the public passenger transport vehicle investment project using buses in Ho Chi Minh City in 2010 shall be applied according to this Circular.

3. The Chairman of the People's Committee of the City, the General Director of the Financial Investment Company, and related organizations and individuals are responsible for implementing in accordance with the guidance provided in this Circular. In the process of implementation, if there are difficulties or obstacles, the Chairman of the People's Committee of the City, the General Director of the Financial Investment Company, and related organizations and individuals must promptly report to the Ministry of Finance for consideration and specific guidance./.