Circular No. 56/2010/TT-BTC guiding the management, supervision, and use of international bond funds issued by the Government in 2010.

CIRCULAR

Guidelines for managing and supervising, using the capital from international bonds issued by the Government in 2010

Based on the Law on Public Debt Management dated June 29, 2009;

Based on Resolution No. 53/NQ-CP dated November 2, 2009 of the Government regarding the continued issuance of international bonds in 2009-2010 by the Government of the Socialist Republic of Vietnam;

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 provides guidelines for managing and supervising, using the capital from international bonds issued by the Government in 2010 as follows:

I. GENERAL PROVISIONS

Article 1. Use of capital from international bonds:

The proceeds from the sale of Government bonds on the international capital market, after deducting related fees and costs associated with the issuance of international bonds, shall be used to repay the State Budget according to Resolution No. 53/NQ-CP dated November 2, 2009 of the Government regarding the continued issuance of international bonds in 2009-2010 by the Government, with the remainder following the instructions of the Prime Minister.

1. Bond issuance underwriting bank consortium: Refers to the three banks Barclays Capital, Citigroup, and Deutsche Bank jointly managing the investment account of the issuance for the Ministry of Finance pursuant to the bond purchase agreement signed on January 22, 2010 between the Ministry of Finance and the aforementioned three banks.

In this Circular, the following terms are understood as follows:

In this Circular, the following terms are understood as follows:

2. Payment agent: Refers to Citibank (Citibank), appointed as the payment agent for the bonds issued in 2010 according to the appointment letter of the payment agent issued by the Ministry of Finance on January 14, 2010.

3. Re-lending agency/banking service provider: Refers to the credit institution authorized by the Ministry of Finance to manage re-lending and recover re-lending funds from the international bonds issued in 2010 pursuant to the authorization agreement signed between the Ministry of Finance and the credit institution, and simultaneously serves as the banking service provider for opening accounts and receiving the bond proceeds.

4. Authorization agreement for re-lending: Refers to the agreement signed between the Ministry of Finance and the re-lending agency whereby the Ministry of Finance authorizes the re-lending agency to manage re-lending and recover re-lending funds from the international bonds issued in 2010 (Annex No. 01 attached to this Circular).

5. Re-lending agreement: Refers to the agreement signed between the re-lending agency and the borrowing entity regarding the conditions and binding terms of the re-lending from the capital of international bonds issued in 2010.

6. Proceeds from the sale of international bonds refer to the actual amount remaining after deducting related fees and costs associated with the issuance.

II. SPECIFIC PROVISIONS

Article 3. Disbursement of international bond capital:

Authorize the banking service provider to open an account for the Ministry of Finance to receive the international bond capital and act as the re-lending agency for the re-lending from the international bond capital issued in 2010 according to the specific purposes stipulated in Article 1 of this Circular.

1. The Ministry of Finance 2. For the purpose of repaying the State Budget: After the bond proceeds are transferred into the "Ministry of Finance - International Bonds" account at the banking service provider, the Ministry of Finance will notify the account for the banking service provider to transfer funds to the State Budget.

For re-lending: The borrowing entity must open a foreign currency account at the banking service provider to implement disbursements according to the plan registered by the borrowing entity in accordance with Article 12 of this Circular.

3. Interest earned on undrawn balances accruing on the international bond account at the banking service provider shall be allocated to the entities using the bond proceeds in proportion to their respective undrawn balances.

3. Interest on the undisbursed amount arising on the international bond account at the servicing bank shall be allocated to the units utilizing the bond funds in accordance with the corresponding undrawn balances.

Article 4. Payment of principal and interest on bonds:

1. The Ministry of Finance directly implements the payment to the settlement agent for the full debt obligation of the bonds (including interest and principal) arising upon maturity according to the procedures stipulated for foreign debt repayment based on the claim documents (including principal and interest) provided by the settlement agent or other agents, after verifying the accuracy of these documents.

2. The source of payment for interest and principal is from the State Budget and the amount recovered from the re-lending.

Article 5. Fees and expenses related to the issuance period:

1. One-time fees and expenses related to the issuance period are calculated in USD, including:

a) Issuance guarantee advisory fee;

b) Legal advisory fees within and outside the country for the issuer and the issuance guarantee consortium;

c) Expenses payable to listing agents, printing agents, and representatives receiving litigation files;

d) Expenses paid to credit rating companies during the issuance period (excluding annual fees payable to national credit rating companies, which are paid directly by the Ministry of Finance to these companies annually);

e) Domestic expenses related to preparation for issuance (costs for making promotional films about Vietnam).

2. Annual fees: are transfer fees and fees paid to the settlement agent and the Singapore Stock Exchange annually based on the notification and invoices issued by the settlement agent and the Singapore Stock Exchange.

Article 6. Method of payment for fees and expenses:

1. All one-time fees and expenses related to the issuance of international bonds shall be borne by the entity using the bond sale proceeds according to the proportion of allocated capital based on nominal value and deducted immediately from the actual receipts.

2. Annual fees will be advanced by the Ministry of Finance when they arise, then allocated to the State Budget and the re-lending entity according to the proportion of capital usage. The Ministry of Finance will notify the lending agency to recover from the borrowing entity and repay to the Ministry of Finance.

3. Other fees related to domestic and foreign fund transfers during the disbursement process from the bond issuance proceeds, and repayment of the bond issuance (if any) shall be borne by the State Budget and/or the re-lending entity according to the actual expenses incurred. The servicing bank is responsible for calculating and collecting these fees for each specific case.

Article 7. Conditions for re-lending:

Re-lending shall be carried out under the following conditions:

1. Re-lending value (debt received): is the face value of the bonds.

2. Re-lending term: equal to the bond term.

3. Re-lending interest rate: equal to the nominal interest rate of the bonds at 6.75% per annum.

4. Currency for re-lending: US Dollar (USD).

5. Debt receipt date: starting from the date of issuance of international bonds on January 29, 2010.

6. Bond principal and interest payment:

- Bond interest is paid semi-annually on January 29 and July 29 each year, starting from July 29, 2010.

- Bond principal is paid once at maturity on January 29, 2020.

Article 8. Loan Repayment Fee:

1. The borrowing entity shall pay the loan repayment fee to the lending agency at a rate of 0.25% per annum on the outstanding principal balance.

2. The loan repayment fee shall be paid periodically at the time of interest and principal payment.

Article 9. Control and Disbursement of Re-lending Funds:

1. When disbursing funds, the borrowing entity must provide necessary documents related to the purpose of fund usage such as loan contracts with repayment schedules, demand notes for each request to withdraw funds, and other relevant files to serve the disbursement of the corresponding amount according to the requisition or payment order (or mandate payment order) for the lending agency to verify accuracy in accordance with the plan and purpose registered by the borrowing entity.

2. After verification, the lending agency will transfer money into the borrowing entity's account and execute the payment order or requisition of the borrowing entity.

Article 10. Recovery of Re-lending Debt:

1. The lending agency has the responsibility to urge and require the borrowing entity to transfer the full principal, interest, and fees of the bonds when due into the Debt Repayment Reserve Fund's account of the Ministry of Finance according to the re-lending authorization contract signed between the Ministry of Finance and the bank serving the Ministry of Finance to repay the payment agent.

2. The procedure for debt recovery and repayment is carried out as follows:

- Upon receiving payment demand documents from the payment agents, the Ministry of Finance allocates the amounts payable to each component between the budget and re-lending. For the re-lending portion, the Ministry of Finance notifies the lending agency of the amount payable, detailing each principal, interest, and fee.

- Notification period: The Ministry of Finance notifies at least ten working days before the payment deadline for the lending agency to request the borrowing entity to settle the payable amounts based on the payment demand documents notified and provided by the Ministry of Finance.

- Based on the payment request of the lending agency, the borrowing entity directly repays into the Debt Repayment Reserve Fund's account at least one working day before the payment deadline for the Ministry of Finance to complete the necessary procedures to repay the payment agents.

3. Currency for debt recovery: United States Dollar (USD).

Article 11. Advance Payment Cases:

1. In cases of advance payment: For re-lending, if the borrowing entity has not arranged sufficient funds to settle part or all of the due obligations (interest and principal of international bonds), the borrowing entity must send a letter to the lending agency and the Ministry of Finance for the lending agency to assess the borrowing entity's repayment capacity. The letter must be sent to the lending agency and the Ministry of Finance at least one month before the interest and fee payment due date, and three months before the principal payment due date. After assessing the borrowing entity's repayment capacity and confirming its inability to repay, the lending agency reports to the Ministry of Finance to make an advance payment for debt settlement. If the advance payment is approved by the Ministry of Finance, the borrowing entity must sign a mandatory loan contract with the Ministry of Finance.

2. Interest rate for advance payment: Equal to the re-lending interest rate.

3. Payment procedure: The Ministry of Finance directly repays the debt into the payment agent's account from the Debt Repayment Reserve Fund. After completion, the Ministry of Finance will officially notify the total advance payment amount plus the transfer fee for recording in the advance payment contract.

4. Advance payment period: The Ministry of Finance only advances payment for one interest period, and subsequent advances can only be made when the previous advance has been fully repaid.

5. Late payment interest: In case the borrowing entity delays repayment compared to the commitments in the advance payment contract signed with the Ministry of Finance and the lending agency, the entity receiving the advance payment must bear late payment interest at 150% of the advance payment interest rate calculated on the actual number of overdue days.

6. All advance payment procedures are carried out in accordance with the current regulations on the establishment, use, and management of the Debt Repayment Reserve Fund.

Article 12. Utilization of international bond funds from loan disbursements:

1. Budgeting for disbursement: The borrowing entity shall prepare a comprehensive plan on the utilization of international bond funds for specific purposes as the basis for implementing disbursements. This plan shall be submitted to the Ministry of Finance for overall approval. After approval, the Ministry of Finance shall notify the lending agency to oversee the disbursement and utilization of funds by the borrowing entity.

2. Temporary idle fund utilization: To enhance the efficiency of fund usage, the borrowing entity may utilize temporarily idle funds that have not yet been disbursed according to the following principles:

- The utilization of temporarily idle funds must ensure safety, effectiveness, and not affect the planned utilization of bond funds for the purposes approved by the Prime Minister and the overall plan approved by the Ministry of Finance.

- When temporarily idle funds remain unused according to the approved overall plan, the borrowing entity shall send a letter to the Ministry of Finance and the lending agency detailing the proposed plan and detailed scheme for utilizing the idle funds (amount, time, and method of utilization). After the Ministry of Finance approves the utilization scheme, the borrowing entity shall submit a letter along with necessary documents requesting the lending agency to transfer the temporarily utilized funds according to the approved purposes. Upon expiration of the utilization period, the borrowing entity shall be responsible for returning the principal amount of temporarily utilized funds to the Ministry of Finance's bond account to implement subsequent tasks as per the approved overall plan. The lending agency shall be responsible for urging and supervising this repayment.

Article 13. Reporting Period:

1. The borrowing entity shall be responsible for preparing and submitting reports on the utilization plan of funds as stipulated in Article 12 of this Circular to the lending agency and the Ministry of Finance.

2. Monthly, quarterly, and annually, the borrowing entity shall be responsible for reporting the implementation status of withdrawing funds and allocating and utilizing temporarily idle bond funds to the lending agency and the Ministry of Finance. For monthly reports, the submission deadline is before the 5th day of the following month, and before the 15th day of the first month of the next quarter for quarterly reports; and before January 31 of the following year for annual reports.

3. Based on the monthly, quarterly, and annual reports of the borrowing entity, the lending agency shall monitor and review the quality of the reports and periodically report to the Ministry of Finance on the management of loaned bond funds monthly. The submission deadline for these reports shall be five days after the borrowing entity's report submission deadline for monthly reports, ten days for quarterly reports, and fifteen days for annual reports.

Article 14. Priority Right to Debt Repayment:

1. Priority right to debt repayment: The highest priority right to repay debts of the borrowing entity belongs to the loan from international bonds issued by the Government. At any given time, if the borrowing entity has maturing debt obligations, the priority for repayment shall be the repayment of the Government's international bond debts.

2. In case the borrowing entity fails to fulfill its obligations, the Ministry of Finance, through the lending agency, shall request the borrowing entity to compensate according to the agreed commitments. If the borrowing entity does not compensate according to the agreed commitments, the Ministry of Finance may request all banks to freeze the borrowing entity's accounts to repay the debt.

Article 15. Accounting, inspection, audit, and settlement regime:

1. The borrowing entity shall be responsible for conducting accounting in accordance with the current state accounting regulations.

2. The borrowing entity shall prepare and submit to the lending entity reports on the plan for using capital as prescribed in Article 12 of this Circular.

3. At the end of the fiscal year, the borrowing entity shall select an auditing company to conduct an audit of the annual financial reports and send them to the lending entity and the Ministry of Finance no later than fifteen days after receiving the Audit Report.

4. The borrowing entity shall be responsible for inspecting the use of capital in projects utilizing international bond funds within its system to ensure that such use is in accordance with the intended purpose and is effective.

5. Quarterly, the lending entity shall carry out inspections of the situation regarding the use of capital at the borrowing entity.

6. Annually or upon urgent request, the Ministry of Finance shall cooperate with the lending entity to inspect the situation regarding the use and recovery of debts from international bond funds at the borrowing entity.

Article 16. Responsibilities of the borrowing entity:

1. Shall fully bear legal responsibility for the use of the proceeds from the issuance of international bonds by the Government that have been re-lent according to the approved objectives by the Government. Any misuse or failure to fulfill contractual obligations under the re-lending agreement will be handled in accordance with the law.

2. Shall enter into a re-lending agreement with the lending entity in accordance with the conditions and terms stipulated in this Circular, consistent with the Delegation Agreement for Re-lending and the provisions of the lending entity, but not contrary to the provisions of this Circular.

3. Shall commit to accepting debt and repaying the Ministry of Finance through the lending entity in accordance with the agreements of the re-lending contract and the provisions of this Circular.

4. Shall maintain accounting records and provide the lending entity with relevant documentation and vouchers concerning the withdrawal of funds and the use of the loan in accordance with current regulations.

5. Shall implement periodic reporting as prescribed in Article 17 of this Circular.

Article 17. Responsibilities of the lending entity:

1. Shall receive the proceeds from the issuance of international bonds and transfer funds to the designated accounts of the State Budget and the borrowing entity as notified by the Ministry of Finance.

2. Shall enter into a re-lending agreement with the borrowing entity in accordance with the conditions and terms stipulated in this Circular, consistent with the Delegation Agreement for Re-lending and the provisions of the lending entity, but not contrary to the provisions of this Circular.

3. Shall urge the repayment of interest and principal debts when due from the borrowing entity and transfer them to the Debt Repayment Reserve Account of the Ministry of Finance as required.

4. Shall report quarterly and annually to the Ministry of Finance on the actual status of capital usage by the borrowing entity as per Appendix 02 of this Circular and any issues arising during the execution of delegated tasks as prescribed in Article 13 of this Circular. In cases where urgent issues requiring resolution arise, the lending entity shall immediately report to the Ministry of Finance for coordinated handling within its authority.

5. Shall perform the function of supervising the use of international bond funds by the borrowing entity.

Article 18. Responsibilities of the Ministry of Finance (Debt Management and External Financial Department):

1. Provide to the lending agencies and borrowing units the relevant documents for settlement of expenses deducted from the issuance of international bonds by the Ministry of Finance and the consortium of guaranteeing banks.

2. Compile related documents concerning incurred fees, allocate them, and notify the lending agencies and borrowing units as a basis for repayment to the Ministry of Finance.

3. Verify the total amount of interest and fees due along with actual supporting documents provided by the payment agent and transfer them to the lending agency to promptly inform the borrowing unit for timely payment.

4. In necessary cases, arrange foreign currency (if the borrowing unit pays in Vietnamese dong) or arrange funds for advance payment (if the lending agencies have not arranged funds for payment) to ensure the timely fulfillment of debt obligations (principal, interest, and fees of the bonds) to the payment agent.

5. Coordinate with the lending agencies to conduct regular and ad hoc inspections of the use of international bond capital and the ability of the borrowing units to fulfill their international bond repayment obligations.

Article 19. Effective Date:

This Circular guides the management, supervision, and use of the Government's international bond capital issued in 2010 and shall take effect 45 days from the date of signature. During implementation, if there are any difficulties, the units should send their comments to the Ministry of Finance for study and resolution./.