Circular No. 66/2000/TT-BTC guides the management and use of credit capital from India under the Agreement for 600 million Rupees signed on December 1, 1999 between the Government of the Socialist Republic of Vietnam and the Government of the Republic of India.

CIRCULAR

GUIDELINES ON THE MANAGEMENT AND USE OF THE INDIAN CREDIT LOAN OF 600 MILLION RUPEES UNDER THE AGREEMENT SIGNED ON DECEMBER 1, 1999 BETWEEN THE GOVERNMENT OF THE SOCIALIST REPUBLIC OF VIET NAM AND THE GOVERNMENT OF THE REPUBLIC OF INDIA
THE GOVERNMENT OF THE SOCIALIST REPUBLIC OF VIET NAM
AND THE GOVERNMENT OF THE REPUBLIC OF INDIA

Pursuant to Decree No. 87/CP dated August 5, 1997 of the Government on the Management and Use of Official Development Assistance and Decree No. 90/CP dated November 7, 1998 of the Government on Borrowing and Repaying Foreign Debts;

Pursuant to the Credit Agreement signed on December 1, 1999 for 600 million Rupees between the Government of the Socialist Republic of Vietnam and the Government of the Republic of India;

Pursuant to the Rescheduling Loan Regulations from Foreign Loans/Grants issued with Decision No. 02/2000/QĐ-BTC dated November 6, 2000 of the Minister of Finance;

Pursuant to Circular No. 546/CP-QHQT dated June 21, 2000 of the Government on the use of the loan from the Government of India under the Credit Agreement of 600 million Rupees;

The Ministry of Finance hereby issues guidelines on the management and use of the loan under the Credit Agreement of 600 million Rupees signed on December 1, 1999 as follows:

I. GENERAL PROVISIONS

1. The loan from the Government of India is a foreign debt of the Government. The entire amount borrowed shall be recorded in the State Budget. The Ministry of Finance is responsible for repaying the debt, including both principal and interest, when due.

2. Project sponsors are responsible for using the funds for the purposes specified in the approved investment project, in accordance with the conditions stipulated in the agreement signed with India, and returning the funds to the State Budget in accordance with the terms of the rescheduling loan contract signed with the Development Support Fund.

3. The Development Support Fund is responsible for managing and rescheduling loans to project sponsors and is entitled to service fees for rescheduling state credit loans according to regulations.

II. SPECIFIC PROVISIONS

1. Signing and Approving Foreign Contracts

1.1. Based on the Feasibility Report approved by competent authorities, the project sponsor selects equipment suppliers and signs contracts in accordance with current tender regulations and the conditions set forth in the signed credit agreement. The value of the contract must not exceed the allocated credit amount. When conducting tenders and negotiating foreign contracts, the project sponsor should pay attention to the following points:

- The value of imported equipment financed by the credit fund is calculated based on the F.O.B price at the Indian port.

- Foreign contracts must be signed in Indian Rupees.

- Imported equipment and spare parts must originate from India.

1.2. After signing and approving the foreign contract in accordance with regulations, the project sponsor sends a copy of the signed contract to the Ministry of Finance (Department of Foreign Finance) for approval by the Government of India, and requests the counterpart to send a copy of the contract to the Ministry of Finance.

1.3. Upon receiving notification of contract approval from the Government of India, the Ministry of Finance (Department of Foreign Finance) will notify the Viet Nam Bank for Foreign Trade, the Development Support Fund, and the project sponsor to proceed with implementation.

2. Withdrawal of Funds and Rescheduling Loans

2.1. Withdrawal of Funds

2.1.1. The Ministry of Finance authorizes the Viet Nam Bank for Foreign Trade to handle all foreign transactions (withdrawal of funds, payments, repayment) and is entitled to charge banking service fees according to regulations.

2.1.2. After receiving contract approval from the Government of India, the Ministry of Finance (Department of Foreign Finance) will notify the Viet Nam Bank for Foreign Trade to process the issuance of a Letter of Credit.

2.1.3. Immediately upon receiving statements notifying the debiting of the loan account from the Indian Bank, the Viet Nam Bank for Foreign Trade will notify the Ministry of Finance (Department of Foreign Finance), the Development Support Fund, and the project sponsor. Based on the withdrawal notice from the Viet Nam Bank for Foreign Trade, the Department of Foreign Finance will process the recording of revenue in the State Budget and expenditure to the Development Support Fund for rescheduling loans to the project sponsor.

2.1.4. Procedures for withdrawing funds and receiving goods are carried out according to standard Letter of Credit procedures and specific provisions in the Foreign Payment Mandate Contract signed between the Ministry of Finance and the Viet Nam Bank for Foreign Trade.

2.1.5. The Viet Nam Bank for Foreign Trade is responsible for guiding project sponsors during the process of issuing Letters of Credit and withdrawing funds.

2.2. Rescheduling Loans The Ministry of Finance authorizes the Development Support Fund to provide rescheduling loans to project sponsors under the following basic conditions:

* Currency for rescheduling loans: Indian Rupees

* Loan period:

1. For working capital loans including spare parts purchased together with the working capital and included in the original contract: the repayment period for the principal is determined in accordance with the repayment period in the approved feasibility study, with a maximum of 15 years from the date of the Agreement (December 1, 1999); the grace period is determined based on the construction period until the project is operational, with a maximum grace period of 4 years from the date of the Agreement (December 1, 1999). According to the repayment schedule in the Credit Agreement, the principal is repaid in 22 semi-annual installments, every six months on January 1 and July 1 each year.

2. For consulting service loans: 3 years, including a 1-year grace period from the date of the Agreement (December 1, 1999). According to the repayment schedule in the Credit Agreement, the principal is repaid in 4 semi-annual installments, every six months on January 1 and July 1 each year.

* Interest rate:

- Interest rate: 5% per annum on the outstanding balance from the first withdrawal date (the date indicated on the debit note from the Indian Bank sent to the Viet Nam Bank for Foreign Trade). Interest accrued is paid semi-annually on January 1 and July 1 each year.

- Overdue interest: 7% per annum (equal to the loan interest rate stipulated in the Credit Agreement plus 2%) on the overdue balance and calculated from the due date according to the repayment schedule until the actual repayment date.

* Project sponsors using the loan must also pay additional fees including:

- Fees payable to the Indian Bank, which are included in the debt value:

(1) Withdrawal fee paid to the Reserve Bank of India: 0.1% of the actual withdrawal amount.

(2) Other fees such as notification fees for credit delegation, transaction fees, and other incidental costs that the Reserve Bank of India or other relevant banks in India must bear.

- The domestic loan refinancing fee is paid in the same installments as the debt repayment schedule and is applied according to the refinancing regulation issued together with Decision No. 02/2000/QĐ-BTC dated January 6, 2000, specifically:

For projects with a refinancing value under three million US dollars and a loan term under twelve years: The refinancing fee rate is 0.3% per annum on the principal balance.

For projects with a refinancing value under three million US dollars and a loan term over twelve years: The refinancing fee rate is 0.25% per annum on the principal balance.

For projects with a refinancing value over three million US dollars: The refinancing fee rate is 0.2% per annum on the principal balance.

- Transaction fees of the Vietnam Bank for Foreign Trade: implemented according to the current fee schedule prescribed by the General Director of the Vietnam Bank for Foreign Trade suitable for each period of capital withdrawal. These fees are directly paid by the project sponsor to the Vietnam Bank for Foreign Trade.

Loan refinancing contracts signed between the Development Support Fund and the project sponsors need to be submitted to the Ministry of Finance and the Vietnam Bank for Foreign Trade for coordination and monitoring.

3. Debt Repayment

3.1. Based on the debt repayment schedule stipulated in the Credit Agreement, annually at the time of debt repayment, the Ministry of Finance is responsible for allocating funds for foreign debt repayment.

3.2. Upon maturity, the Vietnam Bank for Foreign Trade, authorized by the Ministry of Finance, transfers funds for foreign debt repayment. The Vietnam Bank for Foreign Trade collects transfer fees according to the current fee schedule prescribed by the General Director of the Vietnam Bank for Foreign Trade suitable for each period. This fee is debited from the State Treasury account.

3.3. Based on the Credit Agreement signed with the Development Support Fund, the project sponsor is responsible for timely and full repayment of the debt to the state budget. Principal, interest, and refinancing fees are all calculated in Indian Rupees. In cases where the project sponsor repays the debt in Vietnamese Dong or another strong foreign currency, the exchange rate between Vietnamese Dong or another strong foreign currency and Indian Rupees shall be applied according to Circular No. 3000-TC-TCĐN dated August 10, 1998 of the Ministry of Finance regarding guidance on exchange rates for debt recovery.

3.4. The Development Support Fund is responsible for timely and full recovery of debts from project sponsors and repayment to the state budget. In cases of delayed debt recovery, a prompt report must be made to the Minister of Finance for appropriate measures to be taken.

III. INSPECTION AND REPORTING REGIME

1. Quarterly, project sponsors using borrowed funds must send a letter to the Ministry of Finance (Department of Foreign Financial Affairs, Development Support Fund) to report the progress of capital withdrawal in the quarter and the projected withdrawal plan until completion of the withdrawal.

2. Quarterly, the Development Support Fund is responsible for compiling reports on the implementation of loan refinancing and debt recovery to the Ministry of Finance (through the Department of Foreign Financial Affairs) for consolidation.

3. The Ministry of Finance and competent agencies may conduct regular and spot inspections of the management and use of borrowed funds by project sponsors.

IV. IMPLEMENTATION

This Circular takes effect fifteen days from the date of signature.

During implementation, if there are any difficulties, agencies are advised to promptly reflect them to the Ministry of Finance for timely resolution.