Circular No. 48 TC/ĐT guides the management and use of loans for purchasing machinery and equipment from the Côoét fund for the Vân Đình project.

CIRCULAR

Guidelines for managing and using loans to purchase machinery and equipment from the Co-operative Fund for the Van Dinh Project

_________________________

Pursuant to the Loan Agreement between the Government of Vietnam and the Arab Economic Development Co-operative Fund for the Van Dinh Project, signed on January 12, 1987.

Pursuant to Decision No. 91/TTg dated November 13, 1992 of the Prime Minister regarding management of imports of machinery and equipment funded by the State Budget.

Pursuant to Decree No. 58/CP dated August 30, 1993 of the Prime Minister promulgating regulations on foreign borrowing and debt repayment, and Circulars guiding the implementation of said Decree.

After consultation with the National Planning Commission, the State Bank of Vietnam, the Ministry of Water Resources, and the Vietnam Investment and Development Bank, the Ministry of Finance hereby provides guidelines for managing and using loans to purchase machinery and equipment from the Co-operative Fund for the Van Dinh Project as follows:

I. GENERAL PROVISIONS:

1/ This Circular applies only to the second loan disbursement for importing construction machinery and equipment for the Van Dinh Project. Previously imported consignments (already recorded in the State Budget) and funds intended for purchasing steel in the future are not covered by this Circular's guidance.

2/ The loan for purchasing machinery and equipment from the Co-operative Fund for the Van Dinh Project is a foreign government loan, therefore procedures for withdrawing, utilizing, and repaying the loan must be carried out in accordance with Decree No. 58/CP dated August 30, 1993 of the Prime Minister, Circulars guiding the implementation of said Decree, and the terms and appendices attached to the Loan Agreement between the Government of Vietnam and the Arab Economic Development Co-operative Fund signed on January 12, 1987. 3/ The Ministry of Finance will transfer funds to the Vietnam Investment and Development Bank (selected by the Ministry of Finance and the State Bank as a commercial bank) to provide loans to borrowing entities.

4/ Entities using these loan funds are those designated by the Minister of Water Resources as eligible borrowers.

5/ Borrowing entities are responsible for using, managing, and repaying the loan in accordance with current regulations.

1/ Borrowing entities are those directly or indirectly involved in the construction of the Van Dinh Project.

II. SPECIFIC PROVISIONS:

2/ The Vietnam Investment and Development Bank will guide entities in loan application procedures.

3/ Borrowing entities must sign loan agreements with the Vietnam Investment and Development Bank in foreign currency (Co-operative Dinars), with the date of liability being the date when the Co-operative records the debt for Vietnam.

4/ Borrowing entities will have an interest rate of 3.3% per annum (calculated on the amount borrowed in foreign currency), including:

+ Interest rate on the loan from the Co-operative Fund: 3% per annum

+ Service fee of the Vietnam Investment and Development Bank: 0.3% per annum.

5/ If an entity delays repayment, it will be handled according to the general provisions of the Bank.

6/ Loan term: up to 10 years, including a grace period of 1 year. The Vietnam Investment and Development Bank will determine the loan term based on each type of machinery and equipment within the above period.

7/ Encouragement is given to entities to repay the loan ahead of schedule using legitimate sources of funding.

8/ The Vietnam Investment and Development Bank acts as the Financial Agent of the Ministry of Finance, responsible for guiding and establishing loan agreements with borrowing entities, monitoring, and urging the recovery of principal and interest payments to the State Budget to repay the Co-operative Fund. The service fee of the Vietnam Investment and Development Bank (0.3% per annum) will be deducted from the interest collected from borrowing entities. Interest calculation will be done twice a year, on June 15 and December 15. Principal repayment will be made 18 times starting from June 1995.

9/ The Ministry of Water Resources is responsible for directing and urging entities to repay debts on time.

10/ Annually, the Vietnam Investment and Development Bank must settle accounts with the Ministry of Finance regarding the use, collection, and repayment of loan principal and interest to the State Budget until all principal and interest are fully repaid to the Ministry of Finance.

11/ After implementing business measures and credit sanctions, if the Vietnam Investment and Development Bank still fails to fully repay the funds to the State Budget, the Bank must immediately report (with reasons and non-repaying entities) to the Ministry of Finance for submission to the Prime Minister for consideration and resolution.

This Circular takes effect from the date of signature. During its implementation, if there are any issues, the Ministry of Water Resources and the Vietnam Investment and Development Bank should promptly reflect them to the Ministry of Finance and relevant state agencies for research and resolution./.

III. IMPLEMENTATION PROVISIONS:

This Circular takes effect from the date of issuance. During its implementation, if any issues arise, the Ministry of Water Resources and the Vietnam Investment Development Bank shall immediately report them to the Ministry of Finance and relevant state agencies for study and resolution./.