Circular No. 42/2000/TT-BTC guides the implementation of financial management regimes for development support funds.

CIRCULAR

Guidelines for implementing the financial management regime for Development Support Funds

 

 Implementing Decision No. 232/1999/QĐ-TTg dated December 17, 1999 of the Prime Minister on the issuance of the Financial Management Regulations for Development Support Funds, the Ministry of Finance provides specific guidelines 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. These Circulars apply to the system of Development Support Funds, including: Central Development Support Fund; Branches of Development Support Funds in provinces and centrally-administered cities; Domestic and foreign transaction offices of the Development Support Fund.

2. The Development Support Fund shall be capitalized with state-owned charter capital, post-investment interest rate support capital, interest rate differential compensation, and shall mobilize medium and long-term capital sources to implement investment loans, post-investment interest rate support, and credit guarantees in accordance with the provisions of the State.

3. The Development Support Fund is responsible for ensuring the recovery of capital and covering costs, exempt from tax payments and other budget contributions to the State.

4. The Development Support Fund is a centralized accounting unit within the entire system, using income to cover operating expenses; it distributes financial revenue and expenditure differences in accordance with the provisions of this Circular.

5. The Chairman of the Management Board and the General Director of the Development Support Fund are responsible before the Government for the safekeeping of the Fund's capital and assets, their proper and effective use.

6. The Ministry of Finance performs the function of state management over finance, has the responsibility to guide and inspect the financial activities of the Fund.

 

Chapter II. PROVISIONS ON CAPITAL AND ASSETS

1. The operating capital of the Development Support Fund includes:

1.1. State-owned capital:

Charter capital of 30,000 billion VND formed from:

Receiving charter capital already allocated by the State budget to the National Investment Support Fund and state assets transferred from the Investment Development General Department;

Annual supplementary allocation from the State budget until the charter capital is fully established;

When there is a need to change the level of charter capital, the Chairman of the Management Board of the Development Support Fund proposes to the Minister of Finance to submit to the Prime Minister for decision.

Annual State budget allocation for the purpose of increasing loanable investment capital.

1.2. Mobilized capital:

Borrowing from the Foreign Debt Repayment Reserve Fund, Postal Savings Fund, and idle temporary funds of the Vietnam Social Security;

Medium and long-term borrowing from economic organizations, credit institutions, banks, and other domestic organizations;

Mobilizing other sources of capital in accordance with current laws.

1.3. Capital recovered from the principal of domestic loans.

1.4. Capital from the issuance of government bonds.

1.5. Borrowed capital and foreign aid from the Government used to re-lend to investment development projects under the authorization of the Minister of Finance.

1.6. Entrusted capital from investment funds, local development investment funds, and domestic and foreign organizations to lend or provide capital according to entrustment contracts.

1.7. State budget capital allocated for post-investment interest rate support.

1.8. Other capital.

2. The Ministry of Finance implements the allocation of state-owned capital and annual supplementary capital for investment targets.

The Minister of Finance allocates capital to the Development Support Fund. The recipient of the capital is the Chairman of the Management Board and the General Director of the Development Support Fund.

The Ministry of Finance implements the allocation of additional charter capital and capital for the objectives of the Development Support Fund according to the plan assigned by the Prime Minister.

3. Annually, the Development Support Fund must balance its capital sources and the demand for national investment development credit; implement planning for capital mobilization. Mobilizing capital at high interest rates for investment lending must ensure the principle of only mobilizing when all non-interest-bearing or low-interest capital sources have been maximally utilized.

When performing the state-assigned investment credit tasks, the Development Support Fund is compensated for interest rate differentials by the State. The interest rate differential compensation is implemented in accordance with the guidance of the Ministry of Finance.

When implementing the re-lending of official development assistance (ODA) funds, the Development Support Fund receives re-lending fees as stipulated in Decision No. 232/1999/QĐ-TTg dated December 17, 1999 of the Prime Minister and detailed guidance in Decision No. 02/2000/QĐ-BTC dated January 6, 2000 of the Minister of Finance on the re-lending regulations from government foreign loans and aid.

4. The Development Support Fund has the right to change the capital and asset structure within the entire system to serve the development of the Fund's activities.

5. Ensuring the recovery of capital by the Development Support Fund is carried out in accordance with the provisions of Article 12 of the Financial Management Regulations for Development Support Funds issued together with Decision No. 232/1999/QĐ-TTg dated December 17, 1999 of the Prime Minister.

6. Investment capital for basic construction and fixed asset purchases:

6.1. Investment capital for basic construction and fixed asset purchases of the Development Support Fund is formed from the following sources:

Existing charter capital of the Fund;

State budget allocation (if any);

Depreciation of fixed assets;

Development investment fund and other lawful sources as prescribed by the State;

6.2. All basic construction and fixed asset purchase activities of the Development Support Fund must be carried out within the approved financial plan budgeted by the Management Board and must comply with the provisions of the State. The total investment amount for basic construction and fixed asset purchases of the Development Support Fund shall not exceed 50% of the existing charter capital of the Fund. Based on the actual operational situation of the Fund, the Ministry of Finance will specify this ratio for each period appropriately.

7. Inventory and revaluation of assets

7.1. The Development Support Fund must carry out inventory and revaluation of assets in the following situations:

Inventory and revaluation of assets according to the decision of the competent state agency.

Recovery of collateral assets when the investor cannot repay the debt.

Liquidation, sale of assets

7.2. The inventory and revaluation of assets must comply with the current regulations applicable to state-owned enterprises. Any increases or decreases in value due to asset revaluation (excluding the recovery of collateral assets when the investor cannot repay the debt, and assets formed from Fund loans) shall be accounted for as increases or decreases in the Fund's capital according to the regulations applicable to state-owned enterprises.

8. In cases of loss to the Fund's assets, the Fund for Development Support must clearly identify the cause and handle it accordingly.

8.1. If the asset loss is due to the fault of a group or individual, the group or individual causing the loss must compensate according to the law.

8.2. If the asset has been insured under the law, it shall be handled according to the insurance contract.

8.3. The value of the loss after being compensated with money from individuals, groups, and insurance organizations, if still insufficient, shall be covered by the Risk Reserve Fund (extracted from financial revenue and expenditure differences).

9. The depreciation of fixed assets of the Fund for Development Support shall be carried out similarly to state-owned enterprises and in accordance with the agreement of the Ministry of Finance.

10. The Fund for Development Support has the right to lease its managed assets in accordance with the principle of efficiency, preservation, and development of capital as stipulated in the Civil Code and other laws.

The decision on leasing office premises shall be made by the Management Board based on the proposal of the General Director of the Fund for Development Support.

11. The Fund for Development Support may liquidate or sell off assets that are obsolete, deteriorated, damaged beyond repair, technologically outdated, or not in demand or not effectively utilized. The Management Board of the Fund for Development Support decides on the liquidation and sale of office premises and reports to the Ministry of Finance.

When liquidating assets, the Fund for Development Support must appraise the assets and organize auctions in accordance with the law.

The difference between the proceeds from the liquidation or sale of assets and the remaining book value of the assets and liquidation or sale expenses (if any) shall be recorded as income of the Fund for Development Support.

 

III. ESTABLISHING RESERVE FUNDS FOR RISK AND HANDLING RISKS

1. The Fund for Development Support may record risk reserve provisions related to exchange rate fluctuations during operations as per current regulations. However, exchange rate differences arising from the re-lending of ODA funds shall not be recorded as income or expense; the accounting thereof shall be conducted in accordance with specific guidelines issued by the Ministry of Finance.

2. Risk Reserve Fund

2.1. The Fund for Development Support may establish a risk reserve fund to cover losses resulting from objective causes arising during the lending process for investment projects as planned by the State.

2.2. The annual amount of the risk reserve fund shall be calculated at 2% of the total interest earned annually from investment loan projects of the Fund for Development Support and recorded as business expense. The establishment process is as follows:

At the end of each quarter, based on the interest earned from loans in that quarter, the Fund for Development Support temporarily sets aside a risk reserve fund and records it as a business expense. The temporary set-aside amount equals 2% of the interest earned from loans in that quarter.

At the end of the fiscal year, before closing the books, the Fund for Development Support calculates the annual risk reserve fund provision and makes adjustments:

If the temporarily set-aside amount is less than the annual provision amount, the Fund for Development Support will supplement the difference and record it as a business expense.

If the temporarily set-aside amount exceeds the annual provision amount, the Fund for Development Support will reduce business expenses corresponding to the excess amount.

3. The risk reserve fund may be used in the following circumstances:

To write off debts for projects due to force majeure such as losses caused by natural disasters or fires; after using the insurance compensation (if any) to offset the loss, based on the Prime Minister's decision on debt write-off, the Fund for Development Support will allocate the risk reserve fund equivalent to the shortfall in the principal.

To cover losses resulting from objective causes occurring throughout the system.

4. The establishment of the risk reserve fund is carried out at Branches and then transferred to the Central Fund for centralized management. The Fund for Development Support is responsible for managing and using the risk reserve fund for its intended purpose.

At the end of the year, if the risk reserve fund is not fully utilized, the remaining balance will be carried over to the next year's risk reserve fund. In cases where the risk reserve fund balance is insufficient to cover losses incurred in the year, the Management Board of the Fund for Development Support will report to the Ministry of Finance for the Prime Minister's decision.

 

IV. ESTABLISHMENT AND USE OF THE GUARANTEE RISK RESERVE FUND

1. The Fund for Development Support may establish a guarantee risk reserve fund to pay to financial institutions when the project sponsor does not repay the loan on time. The maximum annual limit for establishing the guarantee risk reserve fund is 5% of the total State investment credit capital (excluding ODA re-lending capital). The specific annual amount is decided by the Chairman of the Management Board and included in the annual plan submitted to the Prime Minister for approval.

The establishment of the guarantee risk reserve fund is only carried out at the central level. Branches of the Fund for Development Support and Representative Offices are not allowed to establish a guarantee fund.

2. The rules for guaranteeing investment credit are issued by the Management Board of the Fund for Development Support in accordance with current laws.

3. At the end of the fiscal year, if the guarantee risk reserve fund is not fully utilized, the entire remaining balance will be transferred to the next year's loan capital source.

In cases where the guarantee risk reserve fund is insufficient to fulfill guarantee obligations, the Management Board of the Fund for Development Support will report to the Minister of Finance for the Prime Minister's decision.

 

V. CAPITAL SUPPORT FOR POST-INVESTMENT INTEREST SUBSIDY

1. By the end of September, based on the direction of economic and social development and the plans of relevant Ministries, Provincial People's Committees, City People's Committees, and related organizations, the Fund for Development Support prepares and submits a post-investment interest subsidy support plan to the Ministry of Finance and the Ministry of Planning and Investment for inclusion in the annual State budget plan submitted to the Prime Minister.

2. Annually, based on the plan assigned by the Prime Minister and the list of investment projects that have signed post-investment interest subsidy support contracts with the Fund for Development Support, the Ministry of Finance implements the provision of post-investment interest subsidy capital to the Fund for Development Support according to the implementation progress within the approved budget estimate.

At year-end, the Development Support Fund shall settle with the Ministry ofFinance the amount of subsidized interest capital received and actually allocatedto project sponsors. If at year-end, the allocated capital has not been fully used,it will be deducted from the allocation of subsidized interest capital for thefollowing year.

3.The Development Support Fund shall manage and use the source of subsidizedinterest capital after investment in accordance with relevant regulations. Thecapital for subsidized interest after investment shall not be used for otherpurposes.

 

VI. INCOME AND EXPENSES

1.Income of the Development Support Fund includes all revenues generated from itsbusiness activities and other services, including:

1.1.Business activity income:

Intereston loans and penalties from projects borrowing investment capital from theDevelopment Support Fund (excluding interest on loans from projects usingODA funds for onward lending); penalties from projects guaranteed but failing torepay debts on time, forcing the Development Support Fund to repay on theirbehalf;

Intereston deposits made by the Development Support Fund at State Treasury andcommercial banks;

Intereston temporarily idle loaned capital;

Servicefees for guarantee services at 0.5% per annum on the amount currentlyguaranteed for project sponsors;

Servicefees for entrusted lending according to entrustment contracts;

Subsidizedinterest rate differential and management fees provided by the State Budget;

Incomefrom payment services, information, and cash management;

Otherbusiness activity and service income;

1.2.Financial activity income:

Interestfrom government treasury bills and bonds;

Consultingfee services for investment;

Incomefrom leasing assets;

Otherfinancial service income.

1.3.Unusual activity income:

Penaltiesincome;

Proceedsfrom liquidation and sale of Development Support Fund assets (after deductingremaining value and liquidation and sale expenses);

Differentialincome from revaluation of collateral assets when sponsors fail to repaydebts, assets formed from fund loans;

Recovereddebt previously written off;

Otherunusual income.

2.Expenses of the Development Support Fund include reasonable costs incurredduring the period, including:

2.1.Business activity expenses:

Intereston borrowed funds (excluding interest on loans from projects using ODA fundsfor onward lending);

Intereston bond issuance;

Intereston deposits;

Capitalraising costs;

Paymentprocessing fees;

Entrustedinvestment fees;

Investmentadvisory fees;

Exchange-rate risk reserve costs;

Provisionfor risk reserve establishment;

Otherbusiness activity expenses.

2.2.Management expenses:

Expensesfor staff of the Development Support Fund:

Salariesand allowances as determined by the Prime Minister;

Socialinsurance, health insurance, and trade union fee contributions as prescribedby state regulations;

Mealallowances: individual allowance not exceeding the minimum wage set by thestate for employees;

Hardshipallowances as stipulated by law;

Uniformallowances;

Allowancesfor council members working part-time;

Safetyequipment allowances as prescribed;

Depreciationof fixed assets;

Managementand administrative expenses:

Purchaseof labor tools and office supplies;

Postaland communication expenses: including postal fees, telecommunication, telex,fax, leased lines, etc., paid according to invoices from postal authorities;

Installationof telephones at home for specified individuals as per current state regulations.

Electricity,water, medical, and sanitation expenses for the agency.

Fuelcosts for transportation of staff and management personnel traveling onofficial business as per state regulations.

Travelcosts for staff traveling domestically and internationally as per currentMinistry of Finance regulations.

Publicrelations, press conference, transaction, foreign affairs, and conference expenses.

Supervisionand inspection costs for Development Support Fund branches as per regulations.

Maintenanceand repair costs for assets as per annual financial plan.

Training,professional development, scientific research, technological innovation, andtechnical improvement costs such as organizing training, professionaldevelopment, short-term IT and language courses for Development Support Fundstaff; organizing seminars; purchasing materials and printing for training andresearch purposes.

Warehouse,handling, and transportation expenses.

Othermanagement expenses as prescribed.

2.3.Financial activity expenses:

Expensesfor buying and selling government treasury bills and bonds;

Assetleasing expenses;

2.4.Unusual expenses:

Expensesfor recovering written-off debts;

Expensesfor collecting penalties as prescribed;

Assetinsurance and other types of insurance expenses as prescribed;

Differentialincome from revaluation of collateral assets when sponsors fail to repaydebts, assets formed from fund loans;

Supportexpenses for Party and mass organizations of the Development Support Fund asprescribed by the state (excluding support for trade unions, local organizations,social organizations, and other agencies);

Otheractual expenses with valid documentation.

3.The Development Support Fund shall not account for the following expenses:

Lossesalready supported by the Government or compensated by insurance companies orthe party responsible for the loss;

Administrativepenalties, environmental fines, overdue loan penalties due to subjectivecauses, and financial system violation penalties;

Constructionfund investment, procurement, upgrade, and renovation expenses for fixedassets;

Repair,maintenance, and equipment expenses for welfare facilities such as housing andrest houses for Development Support Fund staff, and other welfare constructionexpenses;     

Expensesfor supporting localities, social organizations, and other agencies;

Excesstravel expenses within and outside the country beyond the limits set by thestate;

Expensescovered by other funding sources.

 

VII. DISTRIBUTION OF INCOME AND USE OF FUNDS

1.Distribution of income:

Afterpaying penalties for violations of laws, the annual financial surplus shall bedistributed as follows:

10%shall be allocated to the operational risk reserve fund until it reaches 25% ofthe charter capital;

Up to50% may be allocated to the development investment fund.

Dedicate 5% to the reserve fund for severance benefits. The deduction level shall continue until the balance of this fund equals six months' actual salary of the Development Support Fund.

Dedicate to the award and welfare fund. The deduction levels for these two funds shall be carried out according to regulations applicable to state-owned enterprises. The ratio of distribution between the two funds shall be decided by the Board of Management.

The remainder after setting up the aforementioned funds will be added to the investment development fund.

2. Purpose of using the established funds:

2.1. The risk reserve fund shall be used to compensate for losses in assets after individual and collective compensation, and insurance organization compensation if insufficient, have been applied.

2.2. The investment development fund shall be utilized for investment, technological innovation, equipment, working conditions, additional assistance for vocational training and improvement, and working conditions for the Development Support Fund.

2.3. The severance benefit reserve fund shall be used to provide severance benefits to employees who have worked at the Development Support Fund for one year or more and lose their jobs due to termination of employment contracts as stipulated by law; to train employees in new skills due to changes in technology or job transitions; to provide pre-employment training for female employees of the Fund; and to enhance the professional qualifications of staff working at the Development Support Fund.

2.4. The award fund shall be used for:

Year-end or regular awards for officers and employees of the Development Support Fund. The award amount shall be determined by the General Director based on the proposal of the Trade Union President, taking into account labor productivity and achievements of each officer and employee working at the Development Support Fund.

Special awards for individuals or groups of the Development Support Fund with innovative ideas that improve technology or business processes and bring about efficiency. The award amount shall be determined by the General Director of the Fund.

Awards for individuals or units outside the Development Support Fund that have relationships and fulfill contractual conditions, making effective contributions to the activities of the Fund. The award amount shall be determined by the Chairman of the Fund's Board of Management.

2.5. The welfare fund shall be used for:

Investing in construction or repair, supplementing capital for welfare projects of the Development Support Fund, contributing capital for joint construction of welfare projects within the industry or with other units under agreed contracts.

Supporting sports, cultural, and public welfare activities for the collective of officers and employees of the Development Support Fund.

Contributing to the Social Welfare Fund.

Providing regular and emergency assistance to officers and employees of the Development Support Fund facing difficulties.

The director of the People's Credit Fund coordinates with the Union Executive Committee (if any) to manage and utilize this fund.

The General Director of the Development Support Fund shall cooperate with the Trade Union Executive Committee to manage and utilize this fund.

 

VIII. ACCOUNTING SYSTEM AND FINANCIAL PLANNING

1. Annually, the Development Support Fund shall be responsible for preparing and reporting to the Ministry of Finance the following plans:

1.1. Capital plan and capital utilization plan:

The annual capital plan includes:

Supplementary budget capital stipulated in the charter;

State budget capital allocated for objectives such as increasing lending investment capital, post-investment interest subsidy capital;

Interest rate subsidy plan;

Implementation of guarantee obligations (if any);

Loan recovery capital;

Capital mobilization from various sources.

Other capital

Capital utilization plan:

Total state investment development credit capital provided through various forms of support: for investment loans, post-investment interest subsidies, investment loan guarantees, and according to sectoral, regional structures; repayment plan for mobilized capital sources.

1.2. Interest rate subsidy plan

1.3. Basic construction investment plan: accompanied by detailed descriptions of planned basic construction, fixed asset purchases, and capital source balancing.

1.4. Revenue and expenditure financial plan: accompanied by detailed descriptions of revenue and expenditure items and specific expenditure standards.

1.5. Staffing and salary fund plan.

These plans, once approved, serve as the basis for the Development Support Fund to implement and settle financial accounts with the finance authority.

Within the first five years of establishment, the Development Support Fund may spend according to the financial plan approved by the Board of Management and endorsed by the Ministry of Finance. In cases where income is insufficient to cover expenditures according to the plan, the Development Support Fund shall report to the Ministry of Finance for appropriate handling within its authority.

2. Periodically (monthly, quarterly, annually), the Development Support Fund shall be responsible for preparing and submitting the following financial reports to the Ministry of Finance:

2.1 Monthly, by the 20th day, the Development Support Fund shall prepare and submit to the Minister of Finance a quick report on the operational status of the entire system of the Fund in accordance with Article 11 of Decree No. 50/1999/NĐ-CP dated July 8, 1999, issued by the Government on the organization and operation of the Development Support Fund.

2.2 Quarterly reports shall be submitted no later than the 25th day of the first month of the quarter, including:

Financial income and expenditure report (Form B 02 KT-Q, Accounting System);

Report on state investment credit loans (Form B 03-KT-Q, Accounting System);

Investment credit guarantee report (Form B 04-KT-Q, Accounting System);

Report on investment loans funded by entrusted capital (Form B 06-TK-A attached);

Balance sheet (Form B 01-KT-Q, Accounting System);

Reserve risk fund situation report (Form B 07-TK-A attached);

Detailed explanation of the financial report (Form B 07-QT-Q, Accounting System).

Report on project loan-repayment status under ministries and sectors (Form B 03-TK-A attached);

Report on project loan-repayment status by region (Form B 03-TK-B attached);

2.3. At the end of the accounting period, no later than March 30 of the following year, the Development Support Fund shall prepare and submit the final settlement report to the Ministry of Finance, including:

Balance sheet (Form B 01-KT-Q, Accounting System);

Final settlement report on financial income and expenditure (Form B 02-KT-Q, Accounting System);

Final settlement report on state investment credit loans (Form B 03-QT-Q, Accounting System);

Final settlement report on investment credit guarantees (Form B 04-QT-Q, Accounting System);

Final settlement report on interest subsidy capital after investment (Form B 05-TK-A attached);

Final settlement report on entrusted investment loans (Form B 06-TK-A attached);

Report on the use of the risk reserve fund (Form B 07-TK-A attached);

Detailed explanation of the financial report (Form B 07-QT-Q, Accounting System).

The final settlement report of the Development Support Fund must be approved by the Chairman of the Fund's Board of Management after confirmation by the Fund's Audit Board.

3. The Development Support Fund is subject to financial inspection by the Ministry of Finance, including:

Regular or spot checks on accounting and final settlement reports.

Inspections on specific topics as required by financial management tasks.

IX. IMPLEMENTATION ORGANIZATION

1.The Development Support Fund shall be responsible for guiding subordinate units to implement the financial regime in accordance with the Financial Management Regulation for the Development Support Fund issued by the Prime Minister and the guidance provided in this Circular.

2.This Circular takes effect from January 1, 2000. During implementation, if there are any difficulties, the Development Support Fund is requested to report to the Ministry of Finance for study and resolution./.

Development Support Fund                                                                                                                                                           Form B03-TK-A

REPORT ON LOAN AND COLLECTION SITUATION OF PROJECTS BELONGING TO MINISTRIES AND SECTORS

Quarter...year...

Unit of measurement: dong

Date...Month...Year...