Circular No. 54/2009/TT-BTC guides the establishment, use, and management of the Fund for Accumulating Foreign Debt Repayment.

CIRCULAR

Guidelines for Establishing, Using, and Managing the Accumulated Fund for Repaying Foreign Debts

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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;

Pursuant to Decree No. 134/2005/NĐ-CP dated November 1, 2005 of the Government promulgating the Regulation on Management of Borrowing and Repaying Foreign Debts;

Pursuant to Decision No. 181/2007/QĐ-TTg dated November 26, 2007 of the Prime Minister promulgating the Regulation on Re-lending from Foreign Loan and Aid Sources of the Government;

The Ministry of Finance guides procedures for establishing, using, and managing the Accumulated Fund for Repaying Foreign Debts as follows:

I. GENERAL PROVISIONS

1. The Accumulated Fund for Repaying Foreign Debts (hereinafter referred to as the Accumulated Fund) is established to collect repayments of re-loans (including all fees) from foreign loans/aid sources of the Government and fees for government guarantees to ensure repayment of foreign debts on re-loans made by the Government, while also ensuring compensation for other risks such as exchange rate risk, credit risk, interest rate risk, and creating a portion of resources to handle potential risks that may arise when the Government guarantees enterprises and financial institutions borrowing abroad.

2. The Accumulated Fund shall open transaction accounts in foreign currency and Vietnamese dong at a reputable commercial bank in Vietnam (hereinafter referred to as the "serving bank"), and the Minister of Finance shall authorize the Director of the Department of Debt Management and External Finance to be the account holder and manage the accounts according to the provisions of this Circular. In case of new foreign currencies, the Accumulated Fund shall request the serving bank to open corresponding accounts to monitor income sources as follows:

- Recovery of re-loans (including principal, interest, and fees outside the country);

- Government guarantee fees;

- Other income (including interest and fees generated from the Accumulated Fund's deposit accounts).

3. The serving bank shall perform transactions related to the Accumulated Fund's collection and disbursement processes, sending monthly statements regarding income, expenditures, interest accrued on accounts, and detailed balances of deposit accounts. The serving bank must regularly inform the Ministry of Finance (Department of Debt Management and External Finance) about the details of opened accounts to guide relevant units to deposit funds into appropriate accounts.

4. The Accumulated Fund shall maintain a minimum reserve in foreign currency based on fluctuations in the Government's foreign debt obligations each year. The minimum reserve shall be calculated at 50% of the total annual foreign debt obligations of re-loans made by the Government. Annually, the Department of Debt Management and External Finance shall develop a plan for the structure of foreign currency reserves of the Accumulated Fund to enhance its safety, mitigate exchange rate risks, and take advantage of the benefits of each type of foreign currency during different periods, to be decided by the Minister of Finance.

II. INCOME OF THE ACCUMULATED FUND:

1. Income sources of the Accumulated Fund include:

a. Recoveries of re-loans include:

- Principal, interest on re-loans from ODA funds and other foreign loans of the Government (after deducting service fees for re-loans) according to the terms specified in supplementary agreements, loan contracts/agreements;

- Foreign fees payable (insurance fees, commitment fees, management fees...) in cases where the State Budget pays these fees to foreign countries under loan agreements.

b. Fees for government guarantees and recoveries of debts under the Government Guarantee Issuance and Management Regulations.

c. Interest on deposits and other income from idle fund utilization of the Accumulated Fund.

d. Other income sources as prescribed by the Government.

2. Income of the Accumulated Fund shall be implemented as follows:

a. Based on supplementary agreements, loan contracts/agreements, borrowers shall submit payments to the re-lender. According to the repayment schedule stipulated in supplementary agreements, loan contracts/agreements signed with the Ministry of Finance, the re-lender shall process transfers to the Accumulated Fund's account and simultaneously proceed with procedures to reduce the borrowed amount from the State Budget.

b. Based on guarantee commitment documents, the government guarantee issuing authority shall require the beneficiary to directly pay the guarantee fee into the Accumulated Fund's account.

c. For the income items mentioned in Subparagraphs a and b of Point 1 above, the re-lenders, government guarantee issuing authorities, and borrowing entities shall aggregate transfer documents to the Accumulated Fund, confirmed by the transferring banks, to record the repayment to the State Budget. Copies of these transfer documents shall be sent by the re-lenders, government guarantee issuing authorities, and borrowing entities to the Ministry of Finance (Department of Debt Management and External Finance) for monitoring and recording the repayment. If the transferred amount includes repayments from multiple projects, the transferring entities must attach detailed transfer documents listing the repayment amounts for each project, categorized by principal, interest, and fees.

d. Other income (if any) shall be deposited into the Accumulated Fund according to the guidelines of the Ministry of Finance.

III. EXPENSES OF THE ACCUMULATED FUND:

1. Expenses of the Accumulated Fund include:

- Repayment to the State Budget of amounts previously advanced by the State Budget to repay foreign debts for re-loans;

- Advance payment on behalf of projects with government guarantees according to decisions of competent authorities;

2. Expenses from the Accumulated Fund:

a. Regarding repayment to the State Budget of amounts previously advanced by the State Budget to repay foreign debts for re-loans.

The repayment of foreign debts of the Government (including both direct loans and re-loans) is carried out from the State Budget according to current regulations on budget spending. The Department of Debt Management and External Finance is responsible for separating the repayment for re-loans and making quarterly repayments to the State Budget from the Accumulated Fund on the 10th day of the first month of each quarter. Specifically, for the fourth quarter repayments, the Department of Debt Management and External Finance shall make the budget repayment before December 30 so that the State Treasury can record the budget revenue within the fiscal year.

When the debt repayment deadline for foreign loans arrives, the Department of Debt Management and Foreign Financial Affairs shall issue a notice of debt repayment, clearly dividing the repayment portion for foreign loan relending in original currency, converting it into Vietnamese dong and US dollars (USD) based on the budget exchange rate on the date of issuance of the notice, and implementing repayment to foreign creditors from the State Budget according to current regulations on budget expenditure.

Quarterly, the Department of Debt Management and Foreign Financial Affairs shall aggregate the debt repayments for foreign loan relending arising in that quarter based on the notices of repayment and, on this basis, prepare vouchers to withdraw from the Accumulation Fund to refund the State Budget in Vietnamese dong, or in available foreign currency at the Accumulation Fund account.

b. For the purpose of repaying on behalf of projects with government guarantees:

In cases where repayment is required for projects with government guarantees, the Ministry of Finance (Department of Debt Management and Foreign Financial Affairs) shall directly transfer repayment from the Accumulation Fund to the creditor immediately after signing the capital advance agreement with the guaranteed party. The guaranteed party shall be responsible for repaying the Ministry of Finance according to the commitments made in the signed capital advance agreement with the Ministry of Finance, as stipulated in the Regulation on Issuance and Management of Government Guarantees.

In cases where the Accumulation Fund does not have sufficient sources, the Ministry of Finance shall report to the Prime Minister for permission to temporarily borrow from other sources of the State Budget to make payments. The Accumulation Fund shall be responsible for recovering and returning to the State Budget the amount temporarily borrowed when there are sufficient sources.

IV. ESTABLISHING THE INCOME AND EXPENSE PLAN OF THE ACCUMULATION FUND:

1. Income Plan:

Annually, during the time of preparing the state budget estimate, lending agencies shall be responsible for basing their plans to recover relending loans and foreign aid loans on supplementary agreements, relending contracts/agreements signed with borrowers to submit to the Ministry of Finance (Department of Debt Management and Foreign Financial Affairs) for consolidation and inclusion in the Accumulation Fund's income plan.

2. Expense Plan:

The Ministry of Finance (Department of Debt Management and Foreign Financial Affairs) shall base its plans for foreign debt repayment on loan agreements to separate the expenses for repayment of relending loans and include them in the State Budget's foreign debt repayment plan, while also basing its forecasts on guarantee contracts to predict the ratio of contingent liabilities for repayment of government-guaranteed loans to establish the Accumulation Fund's expense plan.

V. MANAGEMENT AND USE OF TEMPORARY UNUSED CAPITAL OF THE ACCUMULATION FUND:

1. The difference between income and expenses constitutes temporary unused capital, which, after reaching the minimum reserve level of the Accumulation Fund, may be used for the following purposes in priority order:

- Temporary borrowing to the State Budget;

- Lending to the Vietnam Development Bank with a maximum term of up to three years;

- Utilizing asset management services of reputable domestic commercial banks, financial organizations, and foreign banks legally operating in Vietnam;

- Using for debt restructuring purposes, supporting relending projects or government-guaranteed loans facing temporary difficulties to ensure debt repayment capacity as approved by the Prime Minister or decided by the Minister of Finance.

2. Unused capital of the Accumulation Fund, before being utilized for the aforementioned purposes, shall be deposited with terms at domestic commercial banks and financial organizations of Vietnam based on competitive interest rates to ensure liquidity, safety, and efficiency for the Accumulation Fund. The deposit process shall be carried out according to Appendix 1 attached to this Circular.

VI. RESPONSIBILITIES OF AUTHORITIES AND UNITS IN THE ESTABLISHMENT, USE, AND MANAGEMENT OF THE ACCUMULATION FUND:

1. The Department of Debt Management and Foreign Financial Affairs shall be responsible for:

- Notifying relevant units of the Accumulation Fund's account number;

- Aggregating and establishing the Accumulation Fund's annual income and expense plan together with the annual foreign debt repayment plan and reporting to the Ministry;

- Implementing the use of the Accumulation Fund according to Clause III of this Circular;

- Developing proposals and plans for the approval by the Minister of Finance of the minimum reserve level in foreign currency for each year and measures to ensure a reasonable foreign currency structure of this reserve fund to mitigate exchange rate risks and preserve the Accumulation Fund's capital;

- Determining the amount of temporary unused capital of the Accumulation Fund that can be used for the purposes specified in Point 1, Section V of this Circular and coordinating with related departments and units to develop usage plans and submit to the Minister of Finance for decision;

- Signing supplementary agreements, relending contracts/agreements, and capital advance agreements according to the Ministry's decisions, supervising, and organizing the full recovery of principal and interest for these contracts;

- Coordinating with relending agencies to conduct reconciliation and settlement of supplementary agreements and relending contracts/agreements based on payment transfer documents from relending agencies and borrowing units to the Accumulation Fund account;

- Leading and coordinating with related units to submit to the Minister of Finance for the repayment of foreign loans on behalf of projects with government guarantees;

- Guiding, reconciling, and urging government-guaranteed foreign borrowing organizations to fully and timely pay guarantee fees and other debt recovery amounts (if any) into the Accumulation Fund;

- Implementing accounting work for the Accumulation Fund's income and expenses according to the Minister of Finance's regulations, regularly reconciling income deposits with relending agencies and government guarantee issuing agencies; organizing the tracking of recovered funds used for purposes specified in Section V of this Circular;

- Reporting monthly to the Minister of Finance on the financial status of the Accumulation Fund according to prescribed procedures;

- Organizing the implementation of the deposit of temporary unused capital of the Accumulation Fund according to Point 2, Section V of this Circular;

- Annually preparing a final report on the use of the Accumulation Fund and submitting it to related units within the Ministry of Finance for coordination in implementation.

- During the implementation of the Fund's activities, if difficulties arise in debt recovery leading to risks, the Department of Debt Management and External Finance shall be responsible for using all legal measures allowed by law to recover debts. In cases where debt recovery is not possible, a report must be submitted to the Minister of Finance to propose a solution to the Prime Minister.

2. The State Budget Department shall be responsible for:

- Coordinating with the Department of Debt Management and External Finance to propose solutions for the temporary use of idle funds from the accumulated fund as stipulated in Point 1, Section V above, to be decided by the Minister of Finance;

- Implementing accounting entries for repayments from the accumulated fund in accordance with the provisions of the State Budget Law and current regulations on state budget accounting;

- Regularly, quarterly, reconciling expenditures from the state budget to repay loans for projects with repayments from the accumulated fund.

3. The National Treasury shall be responsible for:

- Implementing accounting entries for foreign debt repayment transactions as requested by the Department of Debt Management and External Finance;

- Regularly reconciling data on foreign debt payments, including payments for foreign debt related to loan repayments and repayments from the accumulated fund for advances from the state budget.

4. Lending agencies shall be responsible for:

- Strictly fulfilling their obligations as committed in supplementary agreements, loan contracts/agreements signed with the Ministry of Finance;

- Regularly, quarterly and annually, reporting to the Ministry of Finance (Department of Debt Management and External Finance) plans for debt recovery from projects for which they have been entrusted to lend, including principal, interest, foreign fees, and loan service fees;

- Organizing statistics and preparing regular quarterly reports on recovered loan funds and deposits into the accumulated fund for each lending project to be sent to the Ministry of Finance (Department of Debt Management and External Finance);

- Guiding and urging units and organizations using government loan funds to fully and timely repay recovered loan funds according to the provisions of supplementary agreements, loan contracts/agreements;

- For lending agencies that are commercial banks authorized by the Ministry of Finance to collect debts from project owners and directly repay to foreign creditors, they must promptly inform the Ministry of Finance (Department of Debt Management and External Finance) after each repayment period to update the database in the debt management program.

VII. IMPLEMENTATION

This Circular shall take effect 45 days from the date of signature and replace Decision No. 10/2006/QD-BTC dated February 28, 2006, issued by the Minister of Finance on the Regulation on Establishment, Use, and Management of the Accumulated Fund for Foreign Debt Repayment.

Relevant units under the Ministry of Finance shall be responsible for implementing this Circular and guiding borrowing units and organizations or those guaranteed by the Government to strictly comply with its provisions. During implementation, if there are any issues, agencies, units, and organizations should promptly reflect them to the Ministry of Finance for appropriate amendments to ensure effective and purposeful use and management of the accumulated fund. /