Circular No. 40/2011/TT-BTC Amending and Supplementing Certain Points of Circular No. 108/2007/TT-BTC dated September 7, 2007 of the Ministry of Finance on guiding the financial management mechanism for official development assistance (ODA) programs and projects.

CIRCULAR

Amending and supplementing certain points of Circular No. 108/2007/TT-BTC dated September 7, 2007 of the Ministry of Finance on guiding the financial management mechanism for official development assistance (ODA) programs and projects ODA programs and projects

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Pursuant to the Law on Public Debt Management;

Pursuant to the Decree No. 79/2010/NĐ-CP dated July 14, 2010 on state debt management operations;

Pursuant to Decree No. 131/2006/NĐ-CP dated November 9, 2006 of the Government promulgating the Regulation on the management and use of official development assistance (ODA) sources;

Pursuant to Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government detailing and guiding the implementation of the Law on State Budget;

Pursuant to the 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;

The Ministry of Finance amends and supplements certain points of Circular No. 108/2007/TT-BTC dated September 7, 2007 of the Ministry of Finance guiding the financial management mechanism for ODA programs and projects as follows:

Article 1

1. Amend paragraph six, Point 1, Subsection IV, Part I as follows:

"The annual financial plan of the project under the State budget allocation, which has been approved by the competent authority and notified, serves as the basis for controlling payments, withdrawing counterpart funds, and ODA funds for the project. After the approved financial plan, the Project Management Board under the State budget allocation shall submit the annual financial plan to the disbursement control agency."

2. Amend Point 1, Subsection V, Part I as follows:

"1. Serving bank:

a) "Serving bank" is a commercial bank selected from the list of qualified commercial banks to be authorized to carry out foreign transactions, payments, and provide banking services for ODA projects. The list of qualified commercial banks is determined and announced by the State Bank of Vietnam in coordination with the Ministry of Finance.

b) Criteria for selecting serving banks:

- Meeting all regulations of the State Bank of Vietnam regarding the capital adequacy ratio applicable to credit institutions;

- Having an operational area suitable for the area of the ODA project;

- Committing to comply with the regulations of the Government, the Ministry of Finance, and the donor's regulations on managing ODA funds;
c) Selection of serving banks:

- Based on the list of qualified commercial banks as serving banks announced by the State Bank of Vietnam and the Ministry of Finance, and the proposal of the commercial bank, the Ministry of Finance will consider and approve the selection of serving banks for ODA projects.

- In cases where multiple commercial banks meet the conditions and propose to serve the same ODA project, priority will be given to banks with experience in serving ODA projects, state-owned commercial banks, and joint-stock commercial banks in which the state holds a controlling stake.

- In cases where the State Bank of Vietnam and the Ministry of Finance have not yet announced the list of qualified commercial banks as serving banks, based on the proposal of the commercial bank, the Ministry of Finance will consult with the State Bank of Vietnam and the donor to select the serving bank.

3. Supplement Paragraph 6, Point 2, Subsection V, Part I as follows:

"In cases where ODA projects apply the special account payment method, the exchange transaction from the special account to VND or another foreign currency for payment shall be conducted through the serving bank. All cases where the serving bank purchases foreign currency from the project must apply the quoted rate of the serving bank at the time of purchase."

4. Amend the first bullet point, Point 1 d), Subsection I, Part II as follows:

"- Payment from the Advance Account/Special Account (hereinafter referred to as TKTƯ) for projects that only have one level of TKTƯ, or payment from the first-level TKTƯ for projects that have multiple levels of TKTƯ".

5. Amend and supplement Points a, b, c, d and abolish Point d Clause 3, Subsection I, Part II as follows:

"a) Documents and procedures for expenditure control for construction investment projects under State budget allocation:

The documents and procedures for expenditure control for construction investment projects under State budget allocation shall be implemented in accordance with Circular No. 27/2007/TT-BTC dated April 3, 2007 of the Ministry of Finance guiding the management, payment of investment capital, and investment-related public service capital from State budget sources, and any subsequent amendments, supplements, or replacements thereof. The specific documents (one set) are as follows:

- Initial documents and materials (except for cases requiring supplementation or adjustment, then resubmit the supplemented or adjusted materials):

+ Agreement on financing signed between the Government of Vietnam and the donor (Vietnamese translation with signature and seal of the project owner);

+ Construction investment project (or Economic-Technical Report for projects that only prepare an Economic-Technical Report) along with the Investment Decision of the competent authority (copy);

+ Tendering documents according to the Bidding Law, including bidding, direct procurement, competitive tendering, self-execution, and special case tendering (copy);

+ Contract between the project owner and the contractor and related documents concerning payment conditions, excluding drawings and technical design documents (copy); if the contract is only signed in a foreign language, submit a Vietnamese translation of the payment provisions of the contract, signed and stamped by the project owner; Non-objection letter from the donor (if applicable);

+ Detailed budget estimate and decision approving the budget estimate of each work item or sub-project for directly executed contracts (copy).

+ For projects under specialized credit programs of the Japan International Cooperation Agency (JICA), ODA projects with sub-projects, or component projects implemented across multiple provinces, the project owner does not need to submit the Loan Agreement/Funding Agreement but should send the provincial and district disbursement control agencies documents and materials confirming the funding ratio of the project.

- Documents and materials confirming advance payment: When requesting advance payment, in addition to the initial documents and materials submitted, the project owner shall submit the following documents to the disbursement control agency: Advance payment guarantee with a value equal to the requested advance amount. The advance payment guarantee must have a term ensuring full recovery of the advance payment as stipulated in the contract; Application for investment capital payment; Withdrawal of investment capital (in case of domestic advance payment).

The level of advance payment and its recovery shall be based on the provisions of the contract, consistent with current domestic regulations and international treaties. The project owner is responsible for recovering the full amount of the advance payment according to the contract and for recovering it entirely when the payment reaches 80% of the contract value.

- Documents and materials confirming the payment of completed volume:

+ For cases where payments are made according to the contract: A table determining the value of the completed work volume according to the contract (original); When there are volumes outside the contract, the project owner sends a table determining the value of the volumes outside the contract (original); Payment request from the contractor/supplier confirmed by the representative of the tendering party and the consultant's representative (if any), and the representative of the receiving party; Application for investment capital payment; Application for advance payment of investment capital (if applicable);

+ For cases where payments are not made according to the contract: Application for investment capital payment (original); Application for advance payment of investment capital (if applicable); Statement of payment vouchers;

+ For cases where the project owner hires labor contracts, the file also includes a payroll list, labor contracts; for cases where conferences, seminars, training sessions are organized through contracts, the project owner provides the contract, statement of payment vouchers, etc. The project owner is fully responsible for the value of the payment request, so there is no need to send invoices and payment vouchers to the expenditure control agency.

- For projects and tenders that are self-implemented by the people:

+ Advance payment and payment documents for completed construction investment volumes are carried out similarly to the above section (regarding advance payment confirmation documents and completion volume payment confirmation documents). In which, the contract is signed between the investor and the Construction Team or Construction Group.

- Payment documents for consulting contracts under a lump sum basis and based on the product being the consultant's report:

+ Project acceptance letter from the project owner regarding the foreign language consultant report attached to the contract product (if paid according to the product); Summary table of progress payment values confirmed by the project owner/project management board (if paid according to progress).

b) Documents and procedures for expenditure control for administrative and public service projects (HCSN) funded by the State Budget:

- Temporary advances or expenditures eligible for payment are implemented according to the guidelines of the Ministry of Finance on the disbursement and settlement of State Budget expenditures through the State Treasury. In cases where international treaties or sponsors have specific provisions, these should be followed. Additionally, for ODA projects, to control expenditures, the project owner must submit the following documents to the expenditure control agency:

+ Initial documents and materials submitted (except in cases of supplementation or adjustment, resubmitting the supplemented or adjusted documents): Agreement on assistance signed between the Government of Vietnam and the sponsor (Vietnamese translation with signature and stamp of the project owner/project management board); Sponsor's non-objection letter to the contract (if applicable).

c) Documents and procedures for expenditure control for loan repayment projects, excluding credit limit projects:

Follow the provisions at point 3.a mentioned above.

d) Documents and procedures for expenditure control for loan repayment projects under credit limits:

Documents and procedures for expenditure control for credit projects or credit components in projects implemented according to the regulations of financial institutions using ODA loans and consistent with the provisions of the funding agreement and the project. Financial institutions lending ODA funds are legally responsible for the accuracy and validity of credit loans and non-credit expenditures in the expenditure statements sent to the Ministry of Finance when requesting withdrawal of funds abroad".

6. Amend point 4.c, Section I, Part II as follows:

"The expenditure control agency is responsible for controlling expenditures or refusing payment within seven working days for pre-expenditure control cases; and within four working days for post-expenditure control cases from the date of receipt of complete valid documents".

7. Amend the second bullet point, paragraph 3, point 6, Section III, Part II as follows:

"- Bank statement proving the payment made to the contractor/beneficiary or confirmation of receipt of the payment capital from the contractor/beneficiary;"

8. Amend point 2, Section II, Part III as follows:

"All programs and projects using ODA loans must be audited by the State Audit Agency or independent auditors. The audit must comply with domestic regulations and sponsor requirements".

9. Add point 6, Section II, Part III as follows:

"6. The project owner is responsible for providing audit reports to the project supervisory agency, sponsors, and financial agencies. If the project is not audited by the State Audit Agency, the project owner must also send the audit report to the State Audit Agency."

10. Amend and supplement Section III, Part III as follows:

"1. Administrative and public service projects using ODA funds shall settle accounts annually according to Circular No. 01/2007/TT-BTC dated January 2, 2007, issued by the Ministry of Finance guiding the examination, review, and announcement of annual settlements for administrative agencies, public service units, organizations supported by state budget, and local budgets, and any supplementary, amended, or replaced circulars (if any).

2. Construction investment projects using ODA funds shall settle accounts annually according to Circular No. 210/2010/TT-BTC dated December 20, 2010, issued by the Ministry of Finance on the settlement of investment capital for basic construction projects from the state budget according to the fiscal year, and shall settle accounts for completed projects according to Circular No. 19/2011/TT-BTC dated February 14, 2011, issued by the Ministry of Finance on the settlement of completed projects from state funds, and any supplementary, amended, or replaced circulars (if any)."

11. Amend and supplement point 1, point 2, Section I, Part IV as follows:

"1. The ODA project management boards established in accordance with Clause 1 and Clause 2 of Article 25 of the Regulation on the Management and Use of Official Development Assistance Funds issued together with Decree No. 131/2006/NĐ-CP dated November 9, 2006 of the Government shall be provided with assets, manage and use such assets in accordance with Decree No. 52/2009/NĐ-CP dated June 3, 2009 of the Government detailing and guiding certain provisions of the Law on the Management and Use of State Assets; Directive No. 17/2007/CT-TTg dated July 25, 2007 of the Prime Minister on Strengthening the Management of Assets of Project Management Boards Using State Capital, and the guidance provided in this Circular.

2. Contractors, consultants, and supervisors of ODA projects shall ensure their own assets for consulting, supervising, and construction purposes using assets owned by themselves or rented. The project management board shall not invest in or purchase assets to provide to contractors, consultants, and supervisors, nor allocate funds for purchasing assets in consulting, supervising, and construction contracts."

12. Amend Point 2, Section III, Part IV as follows:

"2. For vehicles serving work, including special-purpose vehicles (if necessary): The agency assigned to implement the program or project shall arrange and allocate existing means of transportation to serve the management activities of the project management board. In cases where it is not possible to arrange or allocate, the project management board may purchase or lease means of transportation in accordance with Vietnamese laws and international agreements on ODA."

13. Amend Section VI, Part IV as follows:

"The disposal of assets of projects when the project ends or is no longer needed during the implementation of project management must be carried out in accordance with the Circular of the Ministry of Finance on the Management and Disposal of Assets of Projects Using State Capital When the Project Ends and related legal documents."

Article 2

1. This Circular takes effect from June 1, 2011.

2. During the process of organizing and implementing, if there are any difficulties, agencies are requested to promptly report to the Ministry of Finance for guidance and coordination in resolving them./.