Decree No. 48/2017/ND-CP on certain mechanisms and financial policies with special characteristics for Ho Chi Minh City

DECREE

Regulations on certain financial and budget mechanisms and policieswith special characteristics for Ho Chi Minh City

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Pursuant to the Law on Government Organization dated June 19, 2015;

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

Pursuant to the Law on Public Investment dated June 18, 2014;

Pursuant to the Law on Public Debt Management dated June 17, 2009;

At the proposal of the Minister of Finance;

The Government issues this Decree to regulate certain financial and budget mechanisms and policies with special characteristics for Ho Chi Minh City.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

1. This Decree provides detailed regulations on implementing the State Budget Law regarding certain financial and budget mechanisms and policies with special characteristics for Ho Chi Minh City.

2. Other financial and budget mechanisms and policies not specified in this Decree shall be implemented according to the provisions of the State Budget Law and other Decrees of the Government providing detailed guidance on implementing the State Budget Law.

Article 2. Applicability

1. State agencies, political organizations, political-social organizations, occupational-political social organizations, social organizations, occupational social organizations, public service units using the Ho Chi Minh City budget.

2. Other organizations and individuals related to the financial and budget affairs of Ho Chi Minh City.

Article 3. Sources of revenue and expenditure tasks of the Ho Chi Minh City budget

1. The sources of revenue and expenditure tasks of the Ho Chi Minh City budget are classified according to the provisions of the State Budget Law. The People's Committee of Ho Chi Minh City shall submit to the People's Council of Ho Chi Minh City for decision on specific classification of revenue sources and expenditure tasks between budgets at various levels within the city (districts, counties, wards, towns, communes) in accordance with the State Budget Law, taking into account actual conditions, economic and social development requirements, and ensuring national defense, security, and social order and safety of the city.

2. Annually, based on the state budget estimate assigned by the Prime Minister and guidelines from the Ministry of Finance, the People's Committee of Ho Chi Minh City shall submit to the People's Council of Ho Chi Minh City for decision: The city's budget revenue and expenditure estimates; allocation of revenue and expenditure tasks to each agency and unit under the city-level budget; supplementary amounts from the city budget to lower-level budgets consistent with the city's economic and social development needs; while ensuring the overall direction of the state budget.

3. The percentage (%) distribution of revenue items between the central budget and the city budget is decided by the National Assembly. The percentage (%) distribution of revenue items between the central budget and the city budget remains stable for a period of five years, coinciding with the five-year socio-economic development plan or according to the National Assembly's Resolution.

Chapter II

MANAGEMENT OF THE HO CHI MINH CITY BUDGET

Article 4. Budget Expenditure Estimates of Ho Chi Minh City

The budget expenditure estimates of Ho Chi Minh City are determined based on principles, criteria, and budget allocation standards decided by the Standing Committee of the National Assembly applicable during the period of local budget stability.

Article 5. Budget Deficit

1. The city-level budget may have a deficit; the city-level budget deficit can only be used to invest in construction projects included in the medium-term public investment plan approved by the People's Council of Ho Chi Minh City in accordance with Clause 5, Article 7 of the State Budget Law.

2. The limit of the city budget deficit is decided annually by the National Assembly. The specific amount of the city budget deficit annually is decided by the People's Council of Ho Chi Minh City but must not exceed the annual limit set by the National Assembly.

3. The city budget deficit is covered by domestic borrowing sources from issuing local government bonds, relending from the central government's loans to the city, and other domestic borrowings in accordance with the law. The city is not allowed to borrow directly from abroad to cover the budget deficit.

4. The level of debt (including domestic borrowing from issuing local government bonds, relending from the central government's loans to the city, and other domestic borrowings in accordance with the law) of the city budget does not exceed 70% of the local budget revenue allocated according to the classification. Local budget revenue is determined based on the city budget estimate decided by the National Assembly for the budget year. In cases where it is necessary to borrow to implement important infrastructure projects and the city budget debt exceeds the limit stipulated herein, the People's Committee of Ho Chi Minh City shall report to the Government to report to the Standing Committee of the National Assembly for consideration and submission to the National Assembly for decision.

Article 6. Rewards and targeted supplements from increased central state budget revenue compared to the Prime Minister's assigned estimate

1. Annually, where the total central state budget revenue exceeds the National Assembly's approved estimate and the central state budget revenue on the territory exceeds the assigned estimate for the City, based on the provisions of the State Budget Law, the Government shall submit to the Standing Committee of the National Assembly for consideration and decision on the level of rewards and targeted supplements from the increased central state budget revenue according to the provisions of Clauses 2 and 3 of this Article.

2. Annually, where the actual central state budget revenue from revenues shared between the central state budget and the city budget exceeds the Prime Minister's assigned estimate, compared to the previous year's actual revenue collection.

3. Annually, the City may receive targeted supplements from the central state budget not exceeding 70% of the increase in central state budget revenue from revenues shared between the central state budget and the city budget compared to the Prime Minister's assigned estimate (the remaining amount after implementing the excess revenue reward as stipulated in Clause 2 of this Article) and revenues from the central state budget enjoying 100% as specified in Points b, c, d, g, h, i, q, Clause 1, Article 35 of the State Budget Law, which exceed the Prime Minister's assigned estimate (excluding: Revenues not managed by the City, not generated within the territory of Ho Chi Minh City but only recorded and deposited in Ho Chi Minh City; revenues already permitted by competent authorities for use; revenues recorded as income and expenditure and revenues retained by units through the state budget according to the law); the amount of targeted supplements shall not be higher than the increase in central state budget revenue on the territory compared to the previous year's actual revenue collection.

The determination of the amount of targeted supplement is based on the total of all revenues, without calculating each revenue item separately.

4. Based on the level of rewards and the amount of targeted supplements from the source of increased central state budget revenue according to the Resolution of the Standing Committee of the National Assembly, the People's Committee of the City shall report to the People's Council of the City for a decision on its use for investment in infrastructure programs and projects; repayment of loans; implementation of important tasks; and rewards for lower-level budgets.

Article 7. On the financial reserve fund

1. The financial reserve fund of the City is a state financial fund established in accordance with Article 11 of the State Budget Law.

2. The financial reserve fund is formed from the following sources:

a) Allocation in the annual state budget expenditure estimate;

b) Surplus of the state budget as provided for in Clause 1, Article 72 of the State Budget Law;

c) Increased state budget revenue as provided for in Clause 2, Article 59 of the State Budget Law;

d) Interest on deposits in the financial reserve fund;

e) Other financial sources as prescribed by law. The allocation level specified in Point a, b and Point c of this Clause shall be reported by the People's Committee of the City to the People's Council of the City for decision in accordance with the needs of the financial reserve and the actual balancing capacity of the city budget.

3. The People's Committee of the City is authorized to temporarily borrow from the city financial reserve fund to invest in important infrastructure projects within the scope of the city budget's expenditure tasks but not yet allocated capital within the medium-term public investment plan. The borrowing period shall not exceed 36 months, counted from the date of borrowing.

Chapter III

MOBILIZING FINANCIAL RESOURCES FOR HO CHI MINH CITY'S DEVELOPMENT INVESTMENT

Article 8. Domestic Development Investment Capital

1. The State prioritizes investment from the state budget and other financial sources to develop the economy and society so that the city can fulfill its role as the central economic and social hub of the region and the country.

2. For certain important projects with large investment scales in the fields of environment, transportation, and water conservancy managed by Ho Chi Minh City that exceed the local budget's balancing capacity, the People's Committee of Ho Chi Minh City shall prepare a budget estimate along with a proposal to send to the Ministry of Planning and Investment and the Ministry of Finance for consolidation and reporting to the Government to submit to the National Assembly for a decision on support from the central government's budget for the city's budget to implement.

3. To effectively utilize land funds under the city's management, the People's Committee of Ho Chi Minh City may temporarily borrow from the city's budget or from loans according to regulations for infrastructure construction projects within the investment tasks of the budget to organize land use rights auctions. After completing the land use rights auction, the proceeds will be recovered and returned to the budget or repaid the borrowed capital source.

Article 9. Official Development Assistance (ODA) Capital and Preferential Foreign Donor Capital

1. The Government prioritizes allocating Official Development Assistance (ODA) capital and preferential capital sources for Ho Chi Minh City to invest in urban infrastructure system construction programs, environmental programs, and programs and projects with the potential to recover capital.

2. The allocation of investment capital for programs and projects using ODA and preferential capital sources in the city shall be carried out according to the following principles:

a) For programs and projects within the expenditure tasks of the Ho Chi Minh City budget, the Government allows the city to refinance or allocate part according to the provisions of the law. The city is responsible for arranging matching capital from the city's budget to implement and fully repay the principal and interest of the refinanced portion in accordance with the deadlines set by law;

b) For enterprises under the city's management that can refinance to invest in programs and projects with the potential to recover part or all of the loan capital, these enterprises must repay the principal and interest of the loan according to the specified deadlines.

3. The specific level of allocation regarding ODA capital or preferential capital sources of the Government to implement programs and projects for Ho Chi Minh City, as stipulated in point a, Clause 2 of this Article, based on the city's proposal, opinions of the Ministry of Planning and Investment and the Ministry of Finance, the Government will balance in the annual state budget estimate to submit to the National Assembly for a decision in accordance with the State Budget Law and the Public Investment Law.

4. The People's Committee has the authority to decide on accepting non-repayable aid for the city regardless of the scale of assistance; however, for aid related to religion, national defense, and security, it must report to the Prime Minister for a decision; the Chairman of the People's Committee bears responsibility for receiving, managing, and effectively utilizing such aid, implementing accounting and settlement procedures in accordance with the law; periodically reporting to the Ministry of Finance and the Ministry of Planning and Investment for monitoring, supervision, and consolidating reports to the Prime Minister.

Article 10. Principles for Borrowing Funds for Development Investment

1. Ho Chi Minh City may borrow funds for domestic investment through the issuance of local government bonds and other forms of fundraising as prescribed by law; the city must allocate its local budget to repay principal, interest, and related costs.

2. Ho Chi Minh City may refinance foreign loans for development investment in infrastructure within its budgetary responsibilities: The People's Committee of Ho Chi Minh City shall develop a plan, seek opinions from the Ministry of Finance, the Ministry of Planning and Investment, and the State Bank of Vietnam, report to the Ministry of Finance and the Ministry of Planning and Investment for submission to the Prime Minister for consideration and decision according to the mechanism whereby the Government borrows and then refinances the city to implement programs and projects as proposed by the People's Committee. The city is responsible for allocating its local budget to repay principal and interest as prescribed by law.

3. When there is a need to borrow funds for investment, the People's Committee of the city shall develop a borrowing plan to offset the local budget deficit together with the annual budget estimate, and submit it to the Ministry of Finance for consolidation and submission to the competent authority for consideration and decision.

4. Investment borrowing funds for programs and projects must ensure that: Programs and projects using investment borrowing funds must be economically and socially effective; investment programs and projects must be included in the five-year public investment plan decided by the People's Council of the city; construction works and projects must have an investment decision from the competent authority; allocation of the local budget to fully repay debt (principal, interest, and fees) when due.

Article 11. Mobilizing Non-Government Budget Capital

1. In addition to capital mobilization for construction works and projects funded from the government budget as stipulated in Article 9 of this Decree, for other projects capable of recovering capital or projects only partially recovering investment capital, the People's Committee of the city decides or submits to the competent authority for decision in accordance with the law on mobilizing investment under the Public-Private Partnership (PPP) form as prescribed by law, including: BOT (build-operate-transfer), BTO (build-transfer-operate), BT (build-transfer), BOO (build-own-operate), BTL (build-transfer-leasing services), BLT (build-leasing services-transfer), O&M (operate-maintain).

2. Based on the ability to balance the local budget, the city participates in implementing PPP projects through activities such as: Contributing capital to support the construction of works in projects with business operations and fee collection from users, but where revenue is insufficient to recover investment capital and profit; paying service providers according to BTL contracts and BLT contracts; supporting the construction of auxiliary works, organizing compensation, land clearance, and resettlement.

Chapter IV

IMPLEMENTING PROVISIONS

Article 12. Effective Date

1. This Decree takes effect from June 10, 2017, and applies from the 2017 fiscal year.

2. Abolish Decree No. 124/2004/NĐ-CP dated May 18, 2004, of the Government on certain special financial and budget mechanisms for Ho Chi Minh City and Decree No. 61/2014/NĐ-CP dated June 19, 2014, amending and supplementing certain articles of Decree No. 124/2004/NĐ-CP dated May 18, 2004, of the Government.

Article 13. Responsibility for Implementation

1. The Minister of Finance and the People's Committee of Ho Chi Minh City shall organize the implementation of this Decree.

2. Ministers, heads of ministerial-level agencies, agencies under the Government, other central agencies, and the Chairman of the People's Committee of Ho Chi Minh City are responsible for enforcing this Decree./.