Circular No. 31/TC-TCĐN guiding procedures for disbursing investment funds for population-health family projects and national health support projects

CIRCULAR

OF THE MINISTRY OF FINANCE

Guidelines for disbursement procedures of investment capital

for population-health family project and national health support project

Based on the credit agreements for development between the Government of Vietnam and the International Development Association (IDA) signed on February 26, 1996 regarding the Population-Health Family Project and National Health Support Project.

Based on the funding program of the Asian Development Bank (ADB) and the Government of Vietnam.

Based on the agreement between the Government of Vietnam and other governments to provide the Socialist Republic of Vietnam with non-repayable grants to implement the Population-Health Family Project and the National Health Support Project.

Based on Decree No. 178/CP dated October 28, 1994 of the Government on the tasks, authorities, and organizational structure of the Ministry of Finance.

Based on Decree No. 20/CP dated March 15, 1994 of the Government promulgating the regulations on management and utilization of official development assistance.

Based on Decree No. 58/CP dated August 30, 1993 of the Government promulgating the regulations on borrowing and repaying foreign debts.

Based on Decree No. 177/CP dated October 20, 1994 of the Government promulgating the charter for investment and construction management.

Based on circulars guiding the above-mentioned decrees.

Based on Decision No. 735/TTg dated November 9, 1995 and Decision No. 767/TTg dated November 27, 1995 of the Prime Minister approving the Population-Health Family Project and the National Health Support Project.

The Ministry of Finance guides the management and use of funds for the Population-Health Family Project and the National Health Support Project as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1) Explanation of terms:

In this Circular, the following terms shall be understood as follows:

1.1 The project owner is the National Committee for Population and Family Planning (for the Population-Health Family Project) and the Ministry of Health (for the National Health Support Project). To implement the project and coordinate project activities, the National Committee for Population and Family Planning and the Ministry of Health must establish a Central Project Management Board and provincial Project Management Boards with powers and responsibilities defined in the decisions establishing these boards by the respective ministries.

1.2 International financial organizations are the International Development Association (IDA) and the Asian Development Bank (ADB).

1.3 Governments are the Governments of Germany, the Netherlands, and Sweden providing non-repayable grants for the Population-Health Family Project and the National Health Support Project.

1.4 Projects are the Population-Health Family Project according to Decision No. 735/TTg dated November 9, 1995 of the Prime Minister and the National Health Support Project according to Decision No. 767/TTg dated November 27, 1995 of the Prime Minister.

1.5 The serving bank is the Agricultural Bank for the Population-Health Family Project and a commercial bank for the National Health Support Project.

2) General principles:

2.1 Loans from international financial organizations and grants from governments are revenues of the Government of Vietnam, therefore, the Ministry of Finance is responsible for collecting them into the state budget and allocating them to the National Committee for Population and Family Planning and the Ministry of Health to implement approved projects. The Ministry of Finance monitors and records loan disbursements and repayments when due (both principal and interest).

2.2 Capital allocation for projects includes domestic and foreign capital according to the charter for investment and basic construction management issued together with Decree No. 177/CP dated October 20, 1994 of the Government, and circulars guiding Decree No. 177/CP, IDA, ADB, German, Swedish, Dutch government regulations to implement loans, grants, and provisions in this circular.

2.3 Specifically, for the distribution and use of medicines under the projects and for the loan fund supporting private doctors (part 5 of the Population-Health Family Project), separate guidelines will be provided.

2.4 The project owner is responsible for using funds for the intended purposes and contents of the approved project consistent with the conditions committed in loan agreements with IDA and ADB and grant agreements with the governments, which are related documents attached to these agreements.

2.5 The Ministry of Finance and the State Bank authorize the Agricultural Bank of Vietnam to serve as the serving bank for the Population-Health Family Project and a commercial bank to serve as the serving bank for the National Health Support Project, to carry out withdrawal procedures from IDA and ADB (including direct payment methods, repayment, and letter of commitment) and payments to the project upon approval by the Ministry of Finance. Withdrawal of non-repayable grants will be specified in Article 11.6 of this circular.

2.6 During the process of withdrawing loans, the serving bank is entitled to service fees for each withdrawal (including opening L/C fees, document submission fees, telegrams, faxes, etc.) according to Decision No. 162-QĐ/NH2 dated August 19, 1993 of the Governor of the State Bank on charging service fees for bank payment transactions. These service fees are included in the total project investment costs.

II. SPECIFIC PROVISIONS

1) Establishing and approving the investment capital plan for the project

1.1 Annually (in July), in accordance with the budget planning and review system, the Central Project Management Board needs to prepare a financial plan for the project to submit to the competent authority for consolidation and presentation to the Ministry of Planning and Investment, the Ministry of Finance for approval by the Government and the National Assembly (in October each year). When the plan is approved, the Ministry of Finance will notify the capital allocation plan for the project to the project owners and the Investment Development Departments of the 15 provinces involved in the project. The project owners are responsible for notifying the approved plan to the Central Project Management Boards.

1.2 The financial plan for the project should fully reflect the volume of work to be implemented, loan sources, progress of withdrawals from international financial organizations, grants from governments, and necessary counterpart funds.

The report includes Tables 1 and 2 (in Appendix 2) and detailed explanations.

2) Total expenses and capital usage structure are specifically stipulated in Decision No. 735/TTg dated November 9, 1995 and Decision No. 767/TTg dated November 27, 1995 of the Prime Minister approving the Population-Health Family Project and the National Health Support Project, loan agreements with IDA and ADB, grant agreements with governments, and Prime Minister's documents.

3) Opening accounts:

The Central Project Management Board opens two accounts for advance funding in the name of the project at the State Bank (Trading Department) for IDA and ADB funds.

At the service bank, the National Committee for Foreign Debt Management (Ban QLDATW) opens a special account for IDA funds and a provisional account for ADB funds.

The Project Management Board (BQLDATW) opens an account to receive counterpart funds at the Hanoi Investment Bureau, and the provincial project management and implementation board opens a project year account at the branch service bank in their province to receive funds from the special account to settle payments for IDA and ADB (or provisional account for ADB) funds and an account at the provincial Development Investment Bureau to receive counterpart funds from the Government (for provincial projects).

4) Allocation and utilization of domestic government capital

Quarterly, based on the annual plan divided by quarter, the State Capital Investment Corporation (TCĐTPT) will transfer counterpart funds to the Provincial Investment Bureaus with projects (through the state treasury system), the counterpart funds will be directly paid (according to payment ratio) to suppliers and contractors upon request for payment by the provincial project management board. The Provincial Investment Bureau is responsible for checking necessary documents to confirm the value of work completed sufficient to qualify for funding. The list of documents is specified in Point 3.1, Chapter III, Part II of Circular No. 107 TC/ĐT dated December 8, 1994 issued by the Ministry of Finance guiding the management and allocation of investment capital for projects under state budget funds.

The volume of construction works will be carried out using two sources.

Foreign capital: will be requested from the BQLDATW to withdraw from the special account (or provisional account) for settlement.

Domestic capital: the provincial investment bureau will immediately allocate from the government capital transferred according to the quarterly plan under the current investment capital allocation regulations for basic construction.

Diagram of counterpart fund circulation - Appendix 3

5) Withdrawal of allocated capital and management of loans from foreign commercial banks

A. WITHDRAWAL AND PAYMENT FROM THE SPECIAL ACCOUNT
(TEMPORARY ACCOUNT)

5.1 Initial withdrawal into the special account (or provisional account) the BQLDATW prepares documents to send to the Ministry of Finance (Department of Treasury) and the State Bank (SBG):

Request for withdrawal according to IDA or ADB form

Letter requesting withdrawal of funds.

Based on the loan agreement, within three days, the Ministry of Finance will issue a letter of approval sent to the State Bank (SBG) and the BQLDATW.

Upon receipt of the Ministry of Finance's letter, the State Bank signs the request for withdrawal and sends it to IDA (or ADB).

When the money has been transferred to the project's transit account at the State Bank, the State Bank immediately transfers (on the same working day) to the special account (IDA funds) or provisional account (ADB funds) at the Agricultural Bank. The Department of Treasury (Ministry of Finance) notifies the Budget Department. The Budget Department processes the recording of loan receipts into the state budget and records the disbursement of funds to the General Investment according to the buying rate announced by the Foreign Trade Bank at the time of receipt and disbursement.

Initial withdrawal into the special account (or provisional account) will be reflected in the diagram - Appendix 3.

5.2 Additional withdrawal to supplement the special account (provisional account).

The principle of additional withdrawal from the special account (provisional account) is actual expenditure, meaning that the project can only withdraw additional funds for amounts already settled.

Monthly (but not exceeding three months) or when the special account (or provisional account) spends 20% of the total amount, the BQLDATW prepares necessary documents to withdraw additional funds from the special account/provisional account to send to the Ministry of Finance (Department of Treasury) and the State Bank (SBG) for additional withdrawal from the special account.

Request for withdrawal according to IDA and ADB forms

Request for Withdrawal

Expenditure statement of the project management board

Statement of the special account/provisional account of the Agricultural Bank

Within five working days, the Ministry of Finance will notify approval for additional withdrawal from the special account/provisional account. The State Bank signs the request for withdrawal and sends it to IDA/ADB.

When the money arrives in the loan advance account, the State Bank implements as stipulated in Article 5.1 above.

Specific procedures are prescribed in Appendix 4 - Supplementing the Special Account.

5.3 Interest on deposits:

While unused loan funds in the special account generate interest income, on the fifth day of each month, the service bank must submit all accrued interest from the special account (provisional account) to the state budget (state foreign currency reserve account at the State Bank Branch). Account number 331.213.020.1

5.4 Using funds from the special account or provisional account for payment:

a) For the Office of the BQLDATW:

When there is a need to spend from the special account (provisional account) for the Office of the BQLDATW or for tasks directly contracted by the BQLDATW with contractors, the BQLDATW must send the following documents to the State Capital Investment Corporation (Allocation Department):

Annual expenditure plan of the Office of the BQLDA.

Economic contracts, invoices, price lists, and related documents proving the completion of work.

Budget approved by the Project Director.

Acceptance certificate.

Within five working days after receiving all documents, the State Capital Investment Corporation is responsible for reviewing, inspecting, and confirming the volume of work completed sufficient to qualify for funding.

b) For provincial project management boards:

When the provincial project management board needs to spend for its own office or for construction work directly contracted, the provincial project management board sends the following documents to the provincial Development Investment Bureau with projects:

Technical design and general budget decided by the competent authority.

Bid award decision.

Acceptance certificate.

Payment voucher requesting settlement.

Within five working days after receiving all documents, the provincial Development Investment Bureau is responsible for reviewing, inspecting, and confirming the volume of work or construction work completed sufficient to qualify for funding.

After confirming the volume of work, the provincial project management board sends the confirmation document to the BQLDATW.

Based on the confirmed funding request, the BQLDATW issues a letter requesting the State Capital Investment Corporation to allow withdrawal of funds from the special account. Within two working days, the State Capital Investment Corporation will issue a letter requesting the service bank to settle payments to contractors according to the project's requirements. The circulation of documents and the relationship between agencies during the settlement of construction and procurement expenses through the special account (provisional account) will be reflected in the diagram in Appendix 5.

5.5 For administrative and public service expenditures such as travel expenses, conference costs, etc., which are part of the implementation plan for the year, the Project Management Board (PMWB) and provincial project management boards shall prepare detailed budget estimates and request provisional advances from the Hanoi Investment Development Department and provincial investment development departments from the domestic capital sources allocated to the project within the annual plan, within ninety days. The project management boards at all levels are responsible for collecting all necessary receipts, invoices, and settling the provisional advance amount within that period. Settlement will be transferred to the provincial investment development department and the PMWB. After reviewing the settlement, the PMWB will propose to the Treasury to allow payment from the special account (or Central Bank Account) as a repayment method.

5.6 Funds from the Special Account may be used to pay any legitimate expenses of the project. The limit on funds depends solely on the amount currently available in the Special Account.

B. WITHDRAWING FUNDS FROM IDA AND ADB FOR DIRECT PAYMENT AND PROCEDURES FOR SPECIAL LETTERS OF GUARANTEE.

DIRECT TAXATION AND PROCEDURES FOR SUBMITTING SPECIAL UNDERTAKINGS.

Based on the payment requests from suppliers of goods and services, the PMWB prepares applications for withdrawing funds from loan accounts and necessary documents to send to the Ministry of Finance (Department of Foreign Debt) and the servicing bank. The payment file includes:

Application for fund withdrawal according to the model * Request letter for fund withdrawal

Copy of procurement contracts for goods and equipment

Copy of consultancy contracts

Copy of other economic contracts.

Documents proving the validity of the contracts (such as opinions from IDA, ADB or tender results for construction and procurement contracts over $150,000 and consultancy contracts valued over $100,000 for companies and over $50,000 for individuals).

Copy of waybills (for direct payment of goods value).

Invoice or proof of payment (for repayment cases).

Within five working days from the date of receipt of complete withdrawal application files, the Ministry of Finance (Department of Foreign Debt) reviews, checks, and approves the withdrawal. The PMWB and the servicing bank sign the application for fund withdrawal to pay the beneficiary (contractors, suppliers).

Upon receiving notification from IDA or ADB about the payment to the suppliers of goods and services and contractors, the PMWB is responsible for informing two copies to the Ministry of Finance (Department of Foreign Debt and Treasury) to process the recording of income and expenditure in the state budget.

The circulation of documents and the relationship between agencies in direct payments and special commitments are illustrated in Appendices 6 and 7.

6) Withdrawal and use of funds for government aid grants:

The Ministry of Health and the National Committee for Population and Family Planning are responsible for receiving, distributing, and managing expenditures from government aid grants according to Circular No. 22 TC/VT dated March 20, 1995 issued by the Ministry of Finance and the approved project content.

The Ministry of Finance (Grant Management and Reception Office) monitors and records government aid grants, implements the recording of state budget revenue, and allocates capital investment funds to the Ministry of Health and the National Committee for Population and Family Planning as stipulated in Circular No. 22 TC/VT mentioned above.

7) Reporting

Every six months, the project manager is responsible for reporting to the Ministry of Finance (Treasury), the Ministry of Planning and Investment, and the State Bank of Vietnam on the project implementation status, the use of loan funds (domestic and foreign), aid funds, and state counterpart funds.

The servicing bank is responsible for notifying the Ministry of Finance (Department of Foreign Debt, Treasury), and the State Bank (Headquarters) with statements of special account (provisional account) expenditures. In the statement, it clearly shows the monthly interest accrued and the date of transferring interest to the Ministry of Finance.

8) Inspection, audit, and settlement.

8.1 Regularly and unexpectedly, the Ministry of Finance, the Ministry of Planning and Investment, the State Bank, the National Committee for Population and Family Planning, and the Ministry of Health will inspect the project implementation status and the use of funds (domestic and foreign) of the project. If misuse of funds is discovered, the Ministry of Finance will suspend the transfer of funds to address the violation.

8.2 Annually, the special account, provisional account, ledgers, and accounting files of the project must be audited independently in accordance with national regulations, loan agreements, and aid agreements. Audit documents will be sent to the Ministry of Finance and serve as one of the bases for considering additional withdrawals to the special account (provisional account) or withdrawals from the special account (provisional account) for payments, as well as for evaluating project implementation.

8.3 The PMWB is responsible for finalizing settlements when construction works and sub-works are completed and conducting acceptance inspections of contracts according to current regulations.

III. IMPLEMENTATION PROVISIONS

This circular takes effect from the date of signature. During implementation, if there are difficulties, the PMWB, the National Committee for Population and Family Planning, the Ministry of Health, and the servicing bank should promptly reflect them to the Ministry of Finance for research, revision, and supplementation.

ANNEX 1

INVESTMENT CAPITAL PLAN 199...

Project:

Unit:

Project: INVESTMENT PLAN 199...

Unit: Project Management Board... (By quarter)

ANNEX 2

PAYMENT WITH COUNTERPART FUNDS

(1) (1)

(7) (7)

(5) (5)

(6) (6)

(2) (4) (2) (4)

(1) : Transfer capital by quarter

(2) : Sign economic contract

(3) : Implement contract

(4) : Request payment

(5) : Confirm completion of work. After the Provincial Project Management Board inspects and confirms the completion of work, collect all necessary documents and report to the Provincial Investment Development Department for the Investment Development Department to review and confirm the work once again.

(6) : Transfer payment money

(7) : Report to the General Bureau of Investment Development

(8) : Report to the PMWB on the allocation of counterpart funds.

ANNEX 3

WITHDRAWING INITIAL FUNDS INTO THE SPECIAL ACCOUNT
(TEMPORARY ACCOUNT)

(3) (4)

(2)

(6)

(6)

(1) (1) (5)

 (1) Prepare application for fund withdrawal and initial request for withdrawal

(2) Approval of withdrawal

(3) Periodic application for withdrawal and submission to the World Bank (or ADB)

(4) Transfer funds into the advance account

(5) Transfer money into the Special Account (or Central Bank Account)

(6) Notify the Central Project Management Board and the Ministry of Finance of the funds received

ANNEX 4

SUPPLEMENT SPECIAL ACCOUNT (PROVISIONAL ACCOUNT)

(1)

(1) (2) (4)

(6)

(1) (6) (5)

(1) Prepare withdrawal request form and proposal

(2) Approval of withdrawal

(3) Sign withdrawal form and send to the World Bank (or ADB)

(4) Transfer funds into the advance account

(5) Transfer money into the special account (or provisional account)

(6) Report account to the Central Project Management Board and the Ministry of Finance.

ANNEX 5

PAYMENT THROUGH THE SPECIAL ACCOUNT - TEMPORARY ACCOUNT

(7)

(8)

(4) (6)

(4)

(5)

(1) (3) (4) (1) (3) (4)

(2) (2)

(1) Signing contracts

(2) Implementing contracts

(3) Requesting payment

(4) Confirm completion of work. After the Provincial Project Management Board inspects and confirms the completion of work, collect all necessary documents and report to the Provincial Investment Development Department for the Investment Development Department to review and confirm the work once again.

(5) Request for capital payment

(6) Request payment capital

(7) Acceptance of transfer money to contractors, suppliers

(8) Transfer money: The Central Agricultural Bank transfers payment money to the contractor through the Provincial Project Management Board's account at the Provincial Agricultural Bank

ANNEX 6

DIRECT PAYMENT

(8)

(1) (9)

(7)

(6) (6)

(2) (4) (5)

(3)

Note:

(3): Performance of Contract

(4): Payment Request

(5): Acceptance, quality inspection of goods and services

(6): Request for fund withdrawal for payment

(5): Final inspection, quality check of goods and services

(8): Withdrawal of funds

(1) Agreement

(9): Transfer payment money.

ANNEX 7

PAYMENT THROUGH LETTER OF GUARANTEE PROCEDURE

(8)

(1)

(11)

(7) (9) (12)

(6)

(2) (4) (5)

(10)

(3)

(3) Execution of contract

(4) Payment request

(5) Acceptance, quality inspection of goods

(6) Request for fund withdrawal for payment

(5) Final inspection, quality check of goods

(8) Request for fund withdrawal for payment in the form of a commitment letter

(10) Seller's bank pays the supplier, contractor

(11) Send refund request

(12) ADB/WB pays the seller's bank

(12) Send refund request

(12) ADB/WB pays the seller's bank.