Decree No. 63/2017/NĐ-CP on certain mechanisms and special financial and budget policies for Hanoi

DECREE

Regulations on Certain Special Financial and Budgetary Mechanisms and Policies for Hanoi Capital

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

On the basis of the Ordinance on Implementation of Democracy in Communes, Wards, and Towns dated April 20, 2007;

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 the Capital City promulgated on November 21, 2012;

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

At the proposal of the Minister of Finance,

The Government promulgates this Decree to regulate certain special financial and budgetary mechanisms and policies for Hanoi Capital.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

1. This Decree provides detailed regulations implementing the State Budget Law and the Hanoi Law regarding certain special financial and budgetary mechanisms and policies for Hanoi Capital.

2. Other financial and budgetary mechanisms and policies not specified in this Decree shall be implemented in accordance with the State Budget Law, other Decrees of the Government providing detailed guidance for implementation of the State Budget Law, and relevant laws.

Article 2. Applicability

1. State agencies, political organizations, political-social organizations, political-professional social organizations, social organizations, professional social organizations, and public service units using the Hanoi city budget.

2. Other organizations and individuals related to the financial and budgetary affairs of Hanoi City.

Article 3. Sources of Revenue and Expenditure Tasks of the Hanoi Capital Budget

1. The sources of revenue and expenditure tasks of the Hanoi Capital Budget are classified according to the provisions of the State Budget Law. The People's Committee of Hanoi City shall submit to the People's Council of Hanoi City for decision on specific classification of revenue sources and expenditure tasks between budgets at various levels within the city (municipalities, districts, counties, wards, towns, villages) 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 budget estimate

3. The percentage rate (%) for dividing revenue items between the central budget and the city budget is decided by the National Assembly. The percentage rate (%) for dividing 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 as decided by the National Assembly.

Chapter II

MANAGEMENT OF THE HANOI CAPITAL BUDGET

Article 4. Estimated Expenditures of the Hanoi Capital Budget

The estimated expenditures of the Hanoi City budget are determined based on higher allocation standards for budget expenditures than those applied to other centrally-administered cities and provinces during the period of local budget stabilization.

Article 5. Budget Deficit

1. The city-level budget may incur a deficit; the deficit of the city budget can only be used to invest in construction projects included in the medium-term public investment plan approved by the Hanoi City People's Council 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 each year is decided by the Hanoi City People's Council but must not exceed the annual city budget deficit limit set by the National Assembly.

3. The city budget deficit is covered by domestic borrowing from issuing local government bonds, relending from the central government's borrowings for relending to the city, and other domestic loans 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 borrowings for relending, and other domestic loans 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 Hanoi city budget revenue estimate decided by the National Assembly for the budget year. In cases where additional deficit needs to be increased, the city shall report to the Government, report to the Standing Committee of the National Assembly for consideration, and submit to the National Assembly for approval of the city-level budget deficit ratio in the annual state budget estimate.

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

1. Annually, in cases where total central budget revenue exceeds the National Assembly's approved estimate and central budget revenue in the locality exceeds the assigned estimate for the city, based on the provisions of the State Budget Law, the Government shall submit to the National Assembly Standing Committee for consideration and decision on the level of rewards and targeted supplements from the increased central budget revenue as stipulated in Clause 2 of this Article.

2. The central budget will provide targeted supplements (rewards and targeted supplements) to the city corresponding to the entire amount of increased central budget revenue compared to the estimate.

3. Based on the reward level and the amount of targeted supplement from the source of increased central budget revenue according to the Resolution of the National Assembly Standing Committee, the People's Committee of the city shall report to the People's Council of the city to decide on the use for investment in constructing programs and projects of infrastructure; repaying loans; implementing important tasks and rewarding lower-level budgets.

Chapter III

RAISING FINANCIAL RESOURCES FOR DEVELOPMENT INVESTMENT IN THE CAPITAL CITY OF HANOI

Article 7. Domestic Investment Capital

1. The State prioritizes investment through the budget and other financial sources to develop the economy and society so that the city can fulfill its role as the political, economic, and social center of the region and the country.

2. For certain important construction projects with large investment scales in the fields of environment, transportation, and water conservancy managed by Hanoi City that exceed the local budget's balancing capacity, the People's Committee of Hanoi City shall prepare the budget proposal along with the request to be sent 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 decision on providing support from the central budget in the medium-term public investment plan for the city's budget to implement.

3. To effectively utilize land funds under the city's management, the People's Committee of Hanoi City may temporarily borrow from the city's budget or from sources raised in accordance with the State Budget Law for technical infrastructure construction projects within the city's budget investment tasks to organize land use rights auctions; after completing the auction, the proceeds will be recovered and returned to the budget or the raised capital.

Article 8. Official Development Assistance (ODA) and Preferential Loans from Foreign Donors

1. The Government prioritizes allocating ODA funds and other preferential loan sources for Hanoi City to invest in urban infrastructure, environmental, and social welfare programs and projects.

2. The allocation of investment capital for programs and projects using ODA funds and other preferential loan sources in the city shall be carried out according to the principle: For programs and projects within the expenditure responsibilities of the Hanoi City budget, the Government shall allow the city to refinance or allocate part according to the law. The city is responsible for allocating matching funds from the city budget to implement and fully repay the principal and interest of the refinanced portion in accordance with the law.

3. The specific allocation levels of ODA funds or other preferential loan sources by the Government for implementing programs and projects for the city as stipulated in 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 shall balance in the annual state budget estimate submitted to the National Assembly for decision in accordance with the State Budget Law and the Public Investment Law.

4. The People's Committee of Hanoi City is authorized to approve project lists and decide to accept non-repayable aid (ODA, foreign non-governmental organizations) for programs and projects not dependent on the scale of aid, except for aid related to religious institutions, policy and legal reforms, administrative reforms, national defense, and security provided

Article 9. Principles for Borrowing Funds for Development Investment

1. The city of Hanoi shall be entitled to borrow domestic funds for investment through the issuance of local government bonds and other forms of fundraising as prescribed by law; the city shall be responsible for repaying the principal, interest, and related costs using its own budget.

2. The city of Hanoi may borrow foreign funds for development investment in infrastructure projects within the scope of the city's budget expenditures: The People's Committee of Hanoi 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.

3. When there is a need to borrow funds for investment, the People's Committee of the city shall prepare a borrowing plan to offset the budget deficit and submit it to the Municipal People's Council for decision in accordance with the law.

4. Investment loans for programs and projects must ensure: Programs and projects utilizing investment loan funds must guarantee economic and social efficiency; investment programs and projects included in the five-year public investment plan decided by the Municipal People's Council; construction projects and projects that have received investment decisions from competent authorities. The city must allocate local budget funds to repay all debt (principal and interest) upon maturity.

Article 10. Mobilizing Non-Government Budget Capital

1. In addition to capital mobilized for projects funded from the state budget as stipulated in Article 9 of this Decree, for other projects capable of recovering capital or those 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) model, 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 facilities in projects with business operations and user fees, but where revenue is insufficient to recover investment and profit; paying service providers according to BTL contracts and BLT contracts; supporting the construction of auxiliary facilities, organizing compensation, land clearance, and resettlement.

Chapter IV

IMPLEMENTING PROVISIONS

Article 11. Effective Date

1. This Decree takes effect from July 5, 2017, and applies from the 2017 fiscal year.

2. Abolish Decree No. 123/2004/NĐ-CP dated May 18, 2004, of the Government on certain special financial and budget mechanisms for Hanoi Capital and Decree No. 112/2015/NĐ-CP dated November 3, 2015, of the Government amending and supplementing Article 5 of Decree No. 123/2004/NĐ-CP dated May 18, 2004, of the Government.

Article 12. Responsibility for Implementation

1. The Minister of Finance and the People's Committee of Hanoi 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 Hanoi City shall be responsible for enforcing this Decree.