Joint Circular No. 66/TT-LT guiding the implementation of transferring short-term loan balances from state-owned commercial banks to capital provided by the State budget for state-owned enterprises.

JOINT CIRCULAR

Guidelines for Implementing the Conversion of Short-Term Loans from State-Owned Commercial Banks into State Budget Capital for State Enterprises

To implement Resolution No. 85/CP dated July 11, 1997 of the Government on measures to handle working capital for state enterprises;
The Ministry of Finance and the State Bank guide the conversion of short-term loans from state-owned commercial banks into state budget capital for state enterprises as follows:

A. GENERAL PROVISIONS

1. The conversion of loan debts from banks into state budget capital shall be applied to state enterprises meeting the conditions for supplementary working capital allocation in 1997, after applying prescribed measures but still lacking working capital.

State enterprises meeting the conditions include:

- Enterprises producing marketable products.

- Profitable enterprises.

- Enterprises contributing to the state budget.

2. Only the short-term loan debts of state enterprises from state-owned commercial banks will be processed, including:

- Vietnam Industrial and Commercial Bank

- Vietnam Bank for Foreign Trade

- Vietnam Investment and Development Bank

- Vietnam Agricultural and Rural Development Bank

3. Time and scope of processing:

- Only the short-term loan debts of enterprises to banks up to the processing time and within the term will be processed. Overdue debts, debts written off, and medium- and long-term debts are not subject to processing.

- Debts of enterprises that have lost their ability to pay or meet bankruptcy conditions or need restructuring are not eligible for debt conversion into state budget capital.

4. Corresponding to the reduction of loan debts from state-owned commercial banks to state enterprises, the State Bank will process the source to compensate state-owned commercial banks according to the Prime Minister's Decision.

B. SPECIFIC PROVISIONS

I. DETERMINATION OF LOANS TO BE CONVERTED INTO STATE BUDGET CAPITAL:

1. Based on the guidelines of the Ministry of Finance, state enterprises eligible for supplementary working capital allocation shall prepare plans calculating working capital needs, existing amounts, and shortages.

2. The shortage in working capital must exclude anticipated sources for handling in 1997 as follows:

2.1. A portion of the development investment fund.

2.2. State-held inventory sold to increase capital (excluding special reserves).

2.3. Capital mobilized between enterprises with excess capital and those in need.

3. After excluding items mentioned in Point 2 (Section I), based on the most recent loan balance and current working capital of the enterprise, the shortage in working capital will be supplemented by the Ministry of Finance's announcement using the remaining short-term bank loan balance at the time of debt conversion.

4. Loan data of state enterprises up to the processing time are defined as follows:

4.1. Principal debt up to the processing time serves as the basis for converting loan debt into state budget capital.

4.2. Interest debt: State enterprises continue to pay interest to the bank until the decision to convert debt into state budget capital is made (the official processing date specified in Point 4 - Section II).

5. In cases where state enterprises owe multiple state-owned commercial banks and the total debt exceeds the working capital shortage (as stipulated in Point 3 - Section I - Part B), the conversion of loan debt into state budget capital will be implemented at the bank with the largest debt.

II. HANDLING INCREASES AND DECREASES IN CAPITAL BETWEEN BANKS AND ENTERPRISES:

1. State-owned commercial banks are responsible for verifying the short-term loan balances of state enterprises up to the processing time. They compare loan agreements with accounting records to confirm the list of loan agreements sent by state enterprises.

2. After approval by the Prime Minister, the Ministry of Finance announces the decision to convert loan debt into state budget capital for state enterprises to the State Bank of Vietnam.

The State Bank of Vietnam directs state-owned commercial banks to settle the remaining loan balances to convert them into state budget capital for enterprises through its branch system; simultaneously, the State Bank processes compensation sources for state-owned commercial banks corresponding to the converted loan debt into state budget capital.

3. Handling the source for compensation due to reduced loan balances for state-owned commercial banks is carried out as follows:

- In cases where state-owned commercial banks still owe the State Bank: The State Bank reduces the corresponding loan debt for state-owned commercial banks.

- In cases where state-owned commercial banks have no loan balance with the State Bank (or the loan balance with the State Bank is lower than the capital reduction for state enterprises due to conversion into state budget capital): The State Bank uses the source of capital according to the Prime Minister's Decision to directly compensate state-owned commercial banks through its branches in the relevant areas. 4. The conversion of loan debt into state budget capital for state enterprises and the compensation source for state-owned commercial banks are conducted simultaneously.

The processing time is carried out in batches, starting ten days after the State Bank of Vietnam receives the Ministry of Finance's notification about the total amount of loan conversion into state budget capital for state enterprises in each batch.

1. After the Inter-Ministerial Council reviews, the Ministry of Finance is responsible for compiling the capital allocated to state enterprises in each batch and sending it to the State Bank of Vietnam as the basis for implementing the conversion of loan debt into state budget capital. The State Bank of Vietnam is responsible for directing its branches to carry out the conversion of loan debt into state budget capital for state enterprises and handling the compensation source for related commercial bank branches in the area.

C. IMPLEMENTATION

1. After the Inter-Ministerial Council reviews, the Ministry of Finance shall be responsible for compiling the amount of capital granted to state-owned enterprises in each round and submitting it to the State Bank of Vietnam as the basis for implementing the conversion of loan capital into budget capital. The State Bank of Vietnam shall be responsible for directing the branches of the State Bank within its system to implement the conversion of loan capital into budget capital for state-owned enterprises and handling the sources of compensation for relevant commercial bank branches in the area.

2. The State Capital and Asset Management Department shall be responsible for coordinating with the Branches of the State Bank in provinces and cities to handle the conversion of loans into State Budget capital provided to state-owned enterprises through Commercial Bank branches based on the data reported by the Ministry of Finance to the State Bank.

3. At the end of each handling phase, the Central State-Owned Commercial Banks shall be responsible for compiling and reporting the implementation status to the Ministry of Finance and the State Bank of Vietnam so that the State Bank can compile and report to the Prime Minister.

4. This Circular takes effect from the date of signature. The Heads of the Office, the Leaders of the General Departments, Bureaus, and Departments under the Ministry of Finance and the State Bank of Vietnam; Chairmen of the Boards of Directors, General Managers of State-Owned Commercial Banks, General Managers of State-Owned Corporations, and Directors of State-Owned Enterprises shall be responsible for its implementation.

During the implementation process, if there are any difficulties, they are requested to reflect them back to the Ministry of Finance and the State Bank of Vietnam.