Circular No. 314/2016/TT-BTC guiding certain provisions of Government Decree No. 24/2016/NĐ-CP dated April 5, 2016 on the regime for managing state treasury funds

CIRCULAR

Guidelines for certain provisions of Decree No. 24/2016/NĐ-CP dated April 5, 2016, issued by the Government on the regime of state treasury management

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

Pursuant to Decree No. 24/2016/NĐ-CP dated April 5, 2016 of the Government stipulating the regime for managing the state treasury;

Pursuant to Decree No. 215/2013/NĐ-CP dated December 23, 2013, promulgated by the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decision No. 26/2015/QĐ-TTg dated July 8, 2015 of the Prime Minister on the functions, tasks, powers, and organizational structure of the State Treasury under the Ministry of Finance;

At the proposal of the General Director of the State Treasury;

The Minister of Finance issues this Circular to provide guidelines for certain provisions of Decree No. 24/2016/NĐ-CP dated April 5, 2016, issued by the Government on the regime of state treasury management.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular provides guidelines for certain provisions of Decree No. 24/2016/NĐ-CP dated April 5, 2016, issued by the Government on the regime of state treasury management (hereinafter referred to as Decree No. 24/2016/NĐ-CP) regarding: cash flow forecasting; temporary idle state treasury funds usage (excluding temporary advance of idle state treasury funds for the central budget and provincial budgets); measures to handle temporary shortages of state treasury funds; risk management in state treasury fund management activities; responsibilities and authorities of units involved in state treasury fund management.

Article 2. Applicability

1. Units under the State Treasury System (STS).
2. Units under and affiliated with the Ministry of Finance related to state treasury management work, including: General Department of Taxation; General Department of Customs; Debt Management and Financial Advisory Department; State Budget Department.

Chapter II

CASH FLOW FORECASTING

Article 3. Types of cash flow forecasts

1. Cash flow forecasts include three types of forecasts:

1. Forecasting cash flow in Vietnamese dong.
2. Forecasting cash flow in foreign currency converted to US dollars.
3. Forecasting cash flow both in Vietnamese dong and foreign currency converted to Vietnamese dong.

2. The exchange rate for converting various foreign currencies to US dollars and from US dollars to Vietnamese dong shall be based on the accounting exchange rate prescribed by the Ministry of Finance at the time of forecasting.

Article 4. Periods for cash flow forecasting

1. Cash flow forecasts are prepared quarterly (divided by month) and annually (divided by quarter).

1. For quarterly forecasts, the STS compiles forecast data before the last day of the quarter prior to the forecast period.
2. For annual forecasts, the STS compiles forecast data before the last day of the year prior to the forecast period.

2. Depending on the situation of state treasury revenue and expenditure and management requirements, the STS may prepare cash flow forecasts monthly, weekly, or daily.

a) For monthly forecasts, the STS compiles data before the last working day of the previous month.

b) For weekly forecasts, the STS compiles data before the first working day of the forecast week.

Article 5. Content of forecasts

1. The content of state treasury revenue and expenditure forecasts is implemented according to Clause 1 and Clause 2 of Article 6 of Decree No. 24/2016/NĐ-CP, specifically as follows:

1. State treasury revenues, including: state budget revenues; revenues from national financial funds and deposits of transaction units at the STS; revenues from capital mobilization for the state budget and development investment (domestic borrowing; foreign borrowing); revenues from the recovery of temporarily idle state treasury funds.
2. State treasury expenditures, including: state budget expenditures (development investment expenditures; recurrent expenditures; VAT refund payments, excluding payments for debts within the scope of the state budget); debt repayment (including domestic debt repayments such as government bond payments, social insurance debt repayments,...; foreign debt repayments and other payment obligations); expenditures for deposits of transaction units at the STS and national financial funds.

Detailed cash flow forecasts are carried out according to Model No. 05/DBTH, Model No. 06/DBVN, and Model No. 07/DBNT issued together with this Circular.

2. The cash flow forecasts specified in Clause 1 of this Article do not include revenues and expenditures that only transfer sources or funds without affecting the fluctuation of total state treasury balances across the entire STS system; revenues and expenditures for aid and foreign loans directly funded to programs and projects, not processed through the STS; entries for state budget revenues and expenditures.

Article 6Source of forecast information

1. For state budget revenue data:

1. The General Department of Taxation determines and provides domestic revenue and crude oil revenue data to the STS (according to Model No. 01/DB-TCT issued together with this Circular).
2. The General Department of Customs determines and provides state budget revenue data from imported and exported goods to the STS (according to Model No. 02/DB-TCHQ issued together with this Circular).

2. For state budget expenditure data (excluding VAT refunds), the STS determines it itself; for VAT refund expenditures, the General Department of Taxation determines and provides it to the STS (according to Model No. 01/DB-TCT).
3. For borrowing and debt repayment data:

1. Domestic borrowing and debt repayment: The STS determines the amount of borrowing and debt repayment through the issuance of government bonds to cover the budget deficit and for development investment; amounts due for repayment of debt issued through treasury bills to cover temporary shortages of state treasury funds during the period.
2. Foreign borrowing and debt repayment: The Debt Management and Financial Advisory Department determines and provides foreign borrowing and direct aid to the state budget, and amounts due for foreign debt repayment during the period (according to Model No. 03/DB-CQLN issued together with this Circular).
3. Other state budget borrowing and debt repayment: The State Budget Department determines and provides it (according to Model No. 04/DB-NSNN issued together with this Circular).

4. For deposit income and expenditure data of transaction units and national financial funds: The STS determines it itself.
5. Recovery of temporarily idle state treasury funds due during the period: The STS determines it itself.

Article 7. Determination of Temporary Surplus or Shortfall of State Treasury Funds

1. The temporary surplus or shortfall of State Treasury Funds for the period shall be determined according to the following formula:

Estimated opening balance of State Treasury Funds plus (+) total potential inflow of State Treasury Funds during the period (including amounts due for recovery of State Treasury Funds usage) minus (-) total demand for expenditure of State Treasury Funds during the period (including amounts due for repayment of loans to make up for temporary shortfalls of State Treasury Funds) minus (-) minimum required closing balance of State Treasury Funds for the period. In case:

a) The positive difference is the temporary surplus of State Treasury Funds for the period.

b) The negative difference is the temporary shortfall of State Treasury Funds for the period.

2. Based on forecasts of the potential temporary surplus or temporary shortfall of State Treasury Funds for the period, KBNN shall develop a management plan for State Treasury Funds to be submitted to the Ministry of Finance for approval in accordance with Article 5 of Decree No. 24/2016/NĐ-CP. Specifically:

a) Clause 1 of Article 8 is amended and supplemented as follows:

b) In cases where it is expected that there will be a temporary shortfall of State Treasury Funds in the quarter or year, the management plan for State Treasury Funds shall clearly specify the total amount of Treasury bills issued to make up for the temporary shortfall; the total amount of early recovery of funds deposited with commercial banks with fixed terms (if any).

Chapter III

RADIO FREQUENCY SPECTRUM STATE FUNDS TEMPORARY SURPLUS

Article 8. ofửi with fixed terms at commercial banks

1. KBNN shall deposit temporarily surplus State Treasury Funds with commercial banks with high safety levels as ranked by the State Bank of Vietnam in accordance with Point c Clause 1 Article 7 of Decree No. 24/2016/NĐ-CP.
2. The deposit with fixed terms at commercial banks shall be carried out in accordance with the deposit agreement between KBNN and commercial banks, in compliance with relevant laws, specifying the responsibilities and rights of each party and other related contents regarding the deposit with fixed terms.
3. The amount of deposits with fixed terms at commercial banks shall not exceed the limit set forth in Article 13 of this Circular.
4. The maximum term for deposits with fixed terms at commercial banks shall not exceed three months from the date when KBNN completes the procedures to transfer funds for the transaction.
5. The General Director of KBNN shall decide on deposits with fixed terms at commercial banks in accordance with Point b Clause 3 Article 7 of Decree No. 24/2016/NĐ-CP.

Article 9Purchase of Government Bonds with Fixed Terms

1. KBNN may conduct transactions to repurchase Government Bonds and Treasury Bills issued by KBNN and listed on the Stock Exchange.
2. Transaction form: Electronic agreement or ordinary agreement.
3. The maximum term for repurchasing Government Bonds shall not exceed three months from the date when KBNN completes the procedures to transfer funds for the transaction.
4. The process and procedures for repurchasing Government Bonds shall be carried out in accordance with the regulations of the Ministry of Finance on managing Government Bond transactions, guaranteed bonds, and local government bonds.
5. The General Director of KBNN shall decide on repurchasing Government Bonds in accordance with Clause 3 Article 7 of Decree No. 24/2016/NĐ-CP.

Chapter IV

HANDLING STATE FUNDS TEMPORARY SHORTFALL

Article 10. Issuance of Treasury Bills

1. Based on revenue and expenditure situations, the balance of State Treasury Funds, and market conditions, KBNN shall determine the timing and quantity of Treasury Bills issuance to make up for the temporary shortfall of State Treasury Funds appropriately. The maximum quantity of issuance shall not exceed the approved limit for issuing Treasury Bills to make up for the temporary shortfall of State Treasury Funds in the management plan for State Treasury Funds.
2. The maximum term for issuing Treasury Bills to make up for the temporary shortfall of State Treasury Funds shall not exceed three months from the date of issuance.
3. KBNN shall allocate resources to fully and timely repay the principal, interest, and related fees (if any) associated with the issuance of Treasury Bills to make up for the temporary shortfall of State Treasury Funds.
4. The process and procedures for issuing Treasury Bills to make up for the temporary shortfall of State Treasury Funds shall be carried out in accordance with current regulations on issuing Government Bonds.
5. The General Director of KBNN shall decide on the issuance of Treasury Bills to make up for the temporary shortfall of State Treasury Funds in accordance with Clause 4 Article 8 of Decree No. 24/2016/NĐ-CP.

          Article 11. Early Recovery of Deposits with Fixed Terms

1. Based on revenue and expenditure situations, the balance of State Treasury Funds, and the deposit agreement with commercial banks, KBNN shall cooperate with the commercial bank where the funds are deposited to recover early the State Treasury Funds deposited with fixed terms to make up for the temporary shortfall of State Treasury Funds.
2. The quantity and interest rate for early withdrawal of deposits with fixed terms shall be carried out in accordance with the deposit agreement between KBNN and the commercial bank.

Chapter V

RISK MANAGEMENT FOR ACTIVITIES

MANAGEMENT STATE FUNDS

          Article 12. Risk management measures and preventive measures

1. KBNN shall manage risks in the operation of managing State Treasury Funds in accordance with Clause 1, Clause 2, and Clause 4 Article 9 of Decree No. 24/2016/NĐ-CP.
2. KBNN shall maintain the actual balance of State Treasury Funds not lower than the minimum required closing balance of State Treasury Funds for the quarter determined by the following formula:

Where:

1. The number of working days in the planned quarter is specified as 65 days.
2. The number of days for the minimum requirement is specified as five days. In necessary cases, the General Director of KBNN shall decide to adjust the number of days for the minimum requirement to suit the actual situation.

3. In cases where the actual revenue and expenditure of State Treasury Funds significantly deviate from the forecasted figures, KBNN shall promptly adjust the forecasted figures for the next period accordingly.
4. KBNN shall develop and issue internal guidelines on risk management for the operation of managing State Treasury Funds; specifying the responsibilities and rights of individuals and units under KBNN related to the operation of managing State Treasury Funds.

Article 13. Limit on Temporary Idle State Treasury Bills Usage

1. Limit on Advance Borrowing of Temporary Idle State Treasury Bills for the State Budget:

1. For the central budget: Based on the capacity of temporary idle State Treasury Bills and the current outstanding advance borrowing of State Treasury Bills for the central budget, KBNN shall determine the limit on advance borrowing of State Treasury Bills for the central budget appropriately, not exceeding the capacity of temporary idle State Treasury Bills in the quarter.

b) For provincial budgets: The limit on advance borrowing of State Treasury Bills for provincial budgets shall not exceed 10% of the capacity of temporary idle State Treasury Bills in the quarter; in which, for each provincial budget, the total amount of outstanding advance borrowing of State Treasury Bills and other outstanding debts of that provincial budget shall not exceed the maximum debt level prescribed by the Law on State Budget.

2. The limit on using temporary idle State Treasury Bills to deposit with commercial banks and to repurchase government bonds with fixed terms shall not exceed 50% of the capacity of temporary idle State Treasury Bills in the quarter.

In this regard, the limit on using temporary idle State Treasury Bills to repurchase government bonds with fixed terms shall not exceed 10% of the capacity of temporary idle State Treasury Bills in the quarter..

Chapter VI

ACCOUNTING RECORDS

Article 14. Accounting Records

          1. Amounts used from temporary idle State Treasury Bills; recovery of amounts used from temporary idle State Treasury Bills; interest income from operations using temporary idle State Treasury Bills shall be recorded by KBNN according to the state accounting regulations applicable to the TABMIS system.

 2. Loans and repayment of loans (principal, interest, and fees - if any) to offset temporary shortfalls in State Treasury Bills shall be recorded by KBNN according to the state accounting regulations applicable to the TABMIS system. Among them, treasury bills issued by KBNN to offset temporary shortfalls in State Treasury Bills (if any) shall be tracked and recorded in separate accounts and shall not be included in the amount of funds raised for the State Budget, separated from the treasury bills issued by KBNN to offset shortfalls in the State Budget; payments of interest and fees (if any) shall be recorded as operating expenses of KBNN.

Chapter VII

IMPLEMENTATION

Article 15. Tasks and Authorities of Units in Managing State Treasury Bills

1. KBNN shall perform tasks and authorities in managing State Treasury Bills as stipulated in Article 16 of Decree No. 24/2016/NĐ-CP and this Circular.
2. The General Department of Taxation, the General Department of Customs, the Debt Management and Financial Cooperation Department, and the State Budget Department shall be responsible for providing forecast information on cash flows to KBNN as stipulated in Article 6 of this Circular.

          Article 16. Effective Date

          1. This Circular takes effect from January 15, 2017.

2. KBNN and units under and affiliated with the Ministry of Finance shall be responsible for implementing this Circular./.