Circular No. 69/2017/TT-BTC guiding the preparation of five-year financial plans and three-year state budget financial plans.

CIRCULAR

Guidelines for preparing five-year financial plans and three-year state budget plans

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

Pursuant to the State Budget Law dated June 25, 2015;

Pursuant to Resolution No. 343/2017/UBTVQH14 dated January 19, 2017 of the Standing Committee of the National Assembly regarding the preparation, examination, and decision-making of national five-year financial plans, national mid-term five-year investment plans, national three-year state budget plans, annual state budget estimates, central budget allocation schemes, and annual state budget settlement approvals;

Pursuant to Decree No. 163/2016/NĐ-CP dated December 21, 2016 of the Government detailing certain provisions of the State Budget Law;

Pursuant to Decree No. 45/2017/NĐ-CP dated April 21, 2017 of the Government detailing the preparation of five-year financial plans and three-year state budget plans;

Pursuant to Decree No. 31/2017/NĐ-CP dated March 23, 2017 of the Government promulgating regulations on the preparation, examination, and decision-making of local five-year financial plans, local mid-term five-year investment plans, local three-year state budget plans, local budget estimates and allocations, and annual local budget settlement approvals;

WHEREAS, Decree No. 215/2013/NĐ-CP dated December 23, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to the proposal of the Director of the State Budget Department;

The Minister of Finance issues this Circular guiding the preparation of five-year financial plans and three-year state budget plans.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular guides the preparation of five-year financial plans and three-year state budget plans as prescribed in Decree No. 45/2017/NĐ-CP dated April 21, 2017 of the Government detailing the preparation of five-year financial plans and three-year state budget plans.

Article 2. Applicability

Article 1. This Circular applies to entities specified in Clause 1, Article 2 of Decree No. 45/2017/NĐ-CP of the Government.

Article 2. Organizations that occasionally relate to the state budget but are not subject to this Circular include organizations supported once or contracted to provide public goods and services by the state budget; political social-professional organizations, social organizations, and social-professional organizations supported by the state budget according to assigned state tasks; economic and financial organizations invested in or supported with capital by the state according to laws.

Article 3. Ceiling on state budget expenditure

The ceiling on state budget expenditure for ministries, central agencies, and provincial-level agencies in the three-year state budget plan, as stipulated in Clause 5, Article 3 of Decree No. 45/2017/NĐ-CP of the Government, includes ceilings on development investment expenditure, regular expenditure, and detailed ceilings by each area of state budget expenditure as prescribed in Clause 3, Article 3 of Decree No. 163/2016/NĐ-CP of the Government.

Article 4. Ceiling on expenditure for national target programs, target programs, and ceiling on supplementary transfers from the central budget to local budgets

Clause 1. The ceiling on expenditure for national target programs and target programs in the three-year state budget plan is the limit on state budget expenditure to implement programs announced by competent authorities to relevant ministries and program management agencies over a three-year period, detailed annually and by development investment expenditure, regular expenditure, and by each area of state budget expenditure as prescribed in Clause 3, Article 3 of Decree No. 163/2016/NĐ-CP of the Government.

Clause 2. The ceiling on supplementary transfers from the central budget to local budgets is the limit on supplementary transfers from the central budget to each province and centrally-administered city's budget announced by competent authorities over a three-year period, detailed annually; including balance adjustment ceilings and targeted supplementary ceilings.

Article 5. Basic Expenditure

Basic expenditure refers to the state budget needs of agencies and units to carry out tasks, activities, systems, and policies as stipulated in Clause 6 of Article 3 of Decree No. 45/2017/NĐ-CP of the Government; detailed according to development investment expenditure, recurrent expenditure, and each field of state budget expenditure as specified in Clause 3 of Article 3 of Decree No. 163/2016/NĐ-CP of the Government, including:

1. Basic development investment expenditure is the total capital investment development from the state budget (including government bond capital, lottery revenue investment capital, and foreign loan capital as prescribed) for programs and projects approved by competent authorities, allocated (or committed to allocate) in the five-year medium-term public investment plan from the state budget, currently underway and will continue to be implemented over the next three-year plan; specifically including:

a) Capital to settle outstanding construction debts from the state budget capital as prescribed up to the end of the previous year's plan without sufficient funds to pay off;

b) Capital to recover advance payments from the budget estimate to accelerate the progress of ongoing projects as stipulated in Article 37 of Decree No. 163/2016/NĐ-CP of the Government;

c) Investment capital for ongoing projects, new projects initiated in the current year and continued in the following year, including counterpart funds for programs and projects using official development assistance (ODA) and preferential loans from foreign donors according to implementation and disbursement schedules; state capital contributions for projects under public-private partnership (PPP) models;

d) Capital for other development investment expenditures as prescribed by law.

Example 1: Determining basic development investment expenditure in the financial-budget plan for the 2018-2020 period of Agency A, given that information on the five-year medium-term public investment plan from the state budget for the 2016-2020 period was assigned to this agency at the time of plan formulation as follows:

(i) Continuing Project I which began in 2016 and is expected to conclude in 2019, with a total approved investment amount of 20 billion VND, evenly allocated annually at 5 billion VND/year;

(ii) Implementing Project II, with a total investment amount of 20 billion VND, construction period of 24 months starting from 2017, of which the 2017 plan allocation was 8 billion VND;

(iii) Implementing Project III from World Bank (WB) preferential loans: starting from 2017 and ending in 2020, with a total loan amount of 80 billion VND, of which the planned disbursement in 2017 is approximately 5 billion VND, 2018 approximately 25 billion VND, 2019 approximately 35 billion VND, and 2020 approximately 15 billion VND. Domestic counterpart funds (in cash) for implementing the project are estimated at 8 billion VND, allocated in line with the disbursement schedule of preferential loans, including approximately 500 million VND in 2017, 2.5 billion VND in 2018, 3.5 billion VND in 2019, and 1.5 billion VND in 2020;

(iv) Settling construction debts from completed works in 2014 but not yet allocated in the budget estimate to repay until 2017 (approximately 15 billion VND); now according to the Standing Committee of the National Assembly's policy, priority is given to allocating the 2018 plan capital to settle the debt completely.

With the above data, the basic development investment expenditure in the economic activity sector of Agency A in the financial-budget plan for the 2018-2020 period will be:

Unit: million dong

2. Basic Recurrent Expenditure is the total funding requirement to implement tasks, activities, systems, and policies already allocated in the previous year's budget estimate, currently underway and continuing to be implemented over the next three-year plan; determined by the projected recurrent expenditure of the year immediately preceding the plan year and adjusted (added or subtracted) by factors affecting basic recurrent expenditure of that year, including:

a) Variations (increase or decrease) in salary, wages, allowances, and contributions based on salary when employees are promoted or transferred to different positions according to relevant laws, confirmed by competent authorities;

b) Variations (increase or decrease) in the number of beneficiaries under various systems and policies issued by competent authorities, confirmed by competent authorities;

c) Reductions in tasks, activities, systems, and policies that have ended, ceased to be effective, or been cut due to decisions by competent authorities;

d) Savings in recurrent expenditure (reduction) to allocate more resources for new spending needs;

đ) Other adjustments (if any).

Example 2: Determining basic recurrent expenditure in the financial-budget plan for the 2018-2020 period of Agency A, given that related information at the time of plan formulation is as follows:

(i) The administrative management budget for 2017 assigned to the agency is 6 billion VND, of which the total payroll (including rank-based salary, contract staff salary, allowances, and contributions based on salary at the base salary level of 1.21 million VND/month) is about 2.3 billion VND, remaining regular tasks (asset purchases, major repairs, overseas delegations, annual contributions to international organizations, etc.) is about 3.7 billion VND;

(ii) The authorized staffing level of the agency is 20 people, actual staffing presence up to 2017 is 20 people, long-term contractual labor is 4 people. It is expected that during the 2017-2020 period, the agency's total payroll will increase by 3% annually due to regular salary increments according to service years;

(iii) During the 2016-2020 period, the agency must contribute annual membership fees to international organizations at a commitment level of 80,000 USD/year (equivalent to 1.8 billion VND at the 2017 exchange rate), with an annual exchange rate fluctuation range of +2%;

(iv) The fixed asset purchase project was implemented from 2014 and concluded in 2017, with the value of fixed assets purchased in 2017 being 500 million VND.

(v) Implement the policy of allocating official vehicles, the agency will implement the allocation of official vehicles for leadership positions from 2018, with an expected savings of 500 million VND to be used to meet emerging expenditure needs;

Based on the above data, the regular expenditure base for administrative management expenses of Agency A in the three-year financial and state budget plan 2018-2020 will be:

Unit: million dong

Article 6. New Expenditures

New expenditures are the budgetary needs of agencies and units that are considered at the time of preparing the three-year financial and state budget plan and applied throughout the three-year period to implement new tasks, activities, systems, and policies as stipulated in Clause 7, Article 3 of Decree No. 45/2017/ND-CP of the Government, detailed according to new investment development expenditures, regular expenditures, and each field of state budget expenditures as stipulated in Clause 3, Article 3 of Decree No. 163/2017/ND-CP of the Government; including:

1. New investment development expenditures are the total capital investment development needs from the state budget for programs and projects approved by competent authorities and allocated (or committed to allocate) in the five-year medium-term public investment plan, starting implementation (new commencement) from the budget year or two subsequent years, including:

a) Capital for projects that have been allocated funds to start implementation in the current year but could not proceed and must be postponed to the following year without being transferred to the next year according to regulations;

b) Capital recovered from advance appropriations for new commencement of projects as provided for in Article 37 of Decree No. 163/2016/ND-CP of the Government;

c) Capital for projects starting implementation in the budget year, including expansion activities of projects and programs; counterpart capital for programs and projects using official development assistance (ODA) and concessional loans from foreign donors; state capital contribution for projects implemented under the public-private partnership (PPP) model;

d) Capital for projects approved by competent authorities during the transition period between two medium-term investment plans, ensuring investment procedures as prescribed, and planned to be allocated in the subsequent medium-term plan, with a need to commence implementation in the first year of the subsequent medium-term plan;

đ) Feasibility studies for projects to be implemented in the subsequent medium-term plan.

Example 3: Determining new investment development expenditures in the three-year financial and state budget plan 2018-2020 of Agency A, given the relevant information at the time of plan preparation as follows:

(i) In the five-year medium-term public investment plan 2016-2020, Agency A was assigned state budget capital for economic activities to:

- Implement Project IV over a three-year period from 2018 to 2020, with a total approved investment amount of 100 billion VND; the planned capital allocation for 2018 is 30 billion VND, for 2019 is 45 billion VND, and for 2020 is 25 billion VND;

- Implement a feasibility study project for Project V (expected to be allocated and implemented in the subsequent five-year public investment plan). This feasibility study project is carried out from 2018 to 2020, with a total approved investment amount of 30 billion VND, with planned capital allocation of approximately 6 billion VND for 2018, 10 billion VND for 2019, and 14 billion VND for 2020.

(ii) Additionally, Project II was scheduled to commence construction in 2017 with an assigned capital of 8 billion VND, but due to land clearance issues and design adjustments required by regulatory authorities, the agency proactively reported and obtained approval to postpone the commencement date to 2018, maintaining the original construction period (24 months) and approved total investment amount (20 billion VND), however, the 2017 budget allocation for the project cannot be transferred to the following year but will be reallocated to other projects.

With the above data, new investment development expenditures for economic activities of Agency A in the three-year financial and state budget plan 2018-2020 will be:

Unit: million dong

Example 4: At the beginning of 2018, Agency A prepared and submitted to competent authorities for approval Project VI, with a total estimated investment amount of 60 billion VND, to be implemented over three years from 2021 to 2023; the project has been reviewed for funding sources by the Planning and Investment Department and the finance department according to regulations and is expected to be allocated in the five-year medium-term public investment plan 2021-2025, with an immediate need to allocate about 10 billion VND to commence the project in 2021.

With the above data, the 10 billion VND requirement for commencing Project VI in 2021 is the new investment development expenditure of Agency A in the three-year financial and state budget plan 2019-2021.

2. New regular expenditures are additional funding requirements to implement newly issued tasks, activities, systems, and policies, starting from the budget year or two subsequent years; including:

a) Funding to implement tasks, activities, systems, and policies previously issued but only now can be allocated resources to implement in this planning phase;

b) Funding to maintain the implementation of new tasks and activities added in the current year, continuing in the budget year and subsequent years;

c) Additional funding when increasing the staffing level of the agency or unit according to the decision of the competent state authority; maintenance and repair costs for machinery and equipment to operate newly completed and put into use projects in the budget year;

d) Funding for tasks, activities, systems, and policies starting implementation in the budget year, including counterpart funding for new projects using foreign capital.

đ) Funding for implementing the basic salary reform according to the decision of the competent authority.

Example 5: To determine the new recurrent expenditure in the financial-budget plan of agency A for the period 2018-2020, given that the relevant information at the time of planning is as follows:

(i) Starting from 2018, the agency was assigned a new task with an implementation budget of 2 billion VND per year, and the Department of Home Affairs has approved the addition of 2 positions for agency A to carry out this task; based on this, the agency recruited 2 additional staff members to start working from January 1, 2018, with an initial salary coefficient of 3.00;

(ii) For the external affairs task, in 2018, the agency was assigned to organize an international seminar in Vietnam with a budget of 800 million VND; in addition, from 2019 to 2020, the agency sends one delegation each year to participate in international seminars with an average annual budget of 450 million VND;

(iii) According to the National Assembly Resolution, during the period 2018-2020, the basic salary will be adjusted for workers with an average increase of 7% per year, effective July 1 each year;

(iv) Project II is expected to be completed by the end of 2019 and officially put into operation in 2020, with operating costs estimated at 600 million VND per year;

(v) Additionally, the agency plans to use 500 million VND saved from car allocation in 2018 for other needs.

With the above data, the new recurrent expenditure in the field of administrative management of agency A in the financial-budget plan for the period 2018-2020 is calculated as follows:

Unit: million dong

Note: (*) Includes expenses calculated according to standards, salaries, and contributions with wage nature, allowances, and includes additional expenses due to basic salary adjustment.

Chapter II

PREPARATION OF THE FIVE-YEAR FINANCIAL PLAN

Article 7. Content of the Five-Year Financial Plan

The content of the five-year financial plan is implemented in accordance with Article 8 of Decree No. 45/2017/NĐ-CP of the Government, including:

1. The national five-year financial plan is implemented in accordance with Clause 1 of Article 8 of Decree No. 45/2017/NĐ-CP of the Government.

2. The five-year financial plan of provinces and centrally-administered cities (hereinafter referred to as the local five-year financial plan) is implemented in accordance with Clause 2 of Article 8 of Decree No. 45/2017/NĐ-CP of the Government, including:

a) The content of evaluating the implementation of goals, indicators, and main tasks in the previous five-year local financial plan to clearly identify achievements, limitations, weaknesses, and their causes, and lessons learned from practical experience; focusing on the following main contents:

The legal system and policies on finance and state budget in relation to the implementation of economic and social development goals and orientations set forth;

Trends in the scale and structure of state budget revenue and local budget revenue; effectiveness of resource allocation and budget control;

The balance of the state budget and the mobilization of resources to offset budget deficits; implementation of debt management targets and other related financial and budget activities, such as: restructuring and modernizing state-owned enterprises, developing the financial market, administrative reform, financial international integration and cooperation, inspection, audit, anti-corruption, thrift, and waste prevention.

b) The content of determining general and specific goals about finance and state budget for the next five years of the locality must clarify:

Principles and priorities in building and allocating the state budget estimate linked to the goals, tasks, and solutions for economic and social development in the five-year plan according to the resolutions of the Provincial Party Congress and the Provincial People's Council, consistent with the economic and social development strategies of the locality and sectoral development strategies approved by the competent authorities in the same period;

Details of revenue and expenditure targets and structures, budget deficit, and the ability to borrow to offset deficits and manage debt of the locality.

c) The content of determining the framework for balancing the local state budget includes:

Forecasting key macroeconomic indicators as the basis for planning, including: gross regional domestic product (GRDP) growth, consumer price index (CPI), growth in production sectors and industries, and prices of products and goods significantly affecting state budget revenue in the locality;

Orientation for revenue, expenditure, and state budget balance over the five-year plan period, including forecasting sources of revenue, borrowing capacity to offset deficits and repay principal, and the total amount of funds available for state budget expenditure and local budget expenditure; proposing the priority order for allocating resources to each spending area; forecasting average debt management indicators for the entire period and at the end of the plan period;

The Department of Finance shall take the lead in calculating and determining the total revenue, expenditure, deficit, repayment of debt, regular expenditure, total borrowing to offset deficits and repay principal; coordinating with the Planning and Investment Department at the same level to determine the level of investment development expenditure.

Article 8. Procedure for preparing the five-year financial plan

The procedure for preparing the five-year financial plan as prescribed in Article 9 of Decree No. 45/2017/NĐ-CP of the Government is specified as follows:

1. For the national-level five-year financial plan, it shall be implemented in accordance with Clause 1 of Article 9 of Decree No. 45/2017/NĐ-CP of the Government.

2. For the five-year financial plan of provinces and centrally governed cities, it shall be implemented in accordance with Clause 2 of Article 9 of Decree No. 45/2017/NĐ-CP of the Government, specifically:

a) Before May 15 of the fourth year of the previous five-year financial plan period, based on the directives of the Prime Minister and the guidance of the Ministry of Finance and the Ministry of Planning and Investment regarding the preparation of the subsequent five-year financial plan, the People's Committee at the provincial level shall direct the Department of Finance to take the lead, coordinate with the Department of Planning and Investment, and relevant agencies at the local level to conduct a preliminary assessment of the implementation of the goals and tasks of the previous five-year financial plan period, and formulate key issues that need attention in the preparation of the subsequent five-year financial plan period; on this basis, issue a directive from the People's Committee at the provincial level regarding the preparation of the subsequent five-year financial plan for the locality.

b) Before November 30 of the fourth year of the previous five-year financial plan period, the People's Committee at the provincial level shall direct the Department of Planning and Investment to take the lead, coordinate with relevant agencies and units at the local level to determine the orientation and some main indicators for economic and social development of the locality over the next five-year period, and send them to the Department of Finance; based on this, the Department of Finance shall take the lead, coordinate with the Department of Planning and Investment, the local Tax Bureau, and relevant agencies and units at the local level to compile and prepare the subsequent five-year financial plan for the locality, which will be reported to the People's Committee at the provincial level for submission to the Standing Committee of the People's Council at the same level for comments.

c) Before December 31 of the fourth year of the previous five-year financial plan period, based on the comments of the Standing Committee of the People's Council at the same level, the People's Committee at the provincial level shall direct the Department of Finance to incorporate and revise the subsequent five-year financial plan for the locality, submit it for comments (first time) to the Ministry of Finance and the Ministry of Planning and Investment to supplement and perfect it for serving the formulation of the ten-year socio-economic development strategy and the five-year socio-economic development plan for the subsequent period.

d) Before July 20 of the fifth year of the previous five-year financial plan period, the People's Committee at the provincial level shall direct the Department of Finance to take the lead, coordinate with the Department of Planning and Investment, the local Tax Bureau, and other relevant agencies at the local level to base on the socio-economic development goals and tasks of the locality for the subsequent five-year period and update new developments occurring in the first months of the final year of the previous five-year financial plan period, continue to refine the draft of the subsequent five-year financial plan for the locality, and submit it for comments (second time) to the Ministry of Finance and the Ministry of Planning and Investment to ensure consistency with the orientation and objectives of the subsequent national five-year financial plan period.

e) Based on the comments of the Ministry of Finance and the Ministry of Planning and Investment, the People's Committee at the provincial level shall direct the Department of Finance to take the lead, coordinate with the Department of Planning and Investment, the local Tax Bureau, and other relevant agencies at the local level to finalize the subsequent five-year financial plan for the locality, which will be submitted to the People's Committee at the provincial level for reporting to the People's Council at the same level for consideration and decision at the same time as submitting the budget estimate for the first year of the subsequent five-year plan period.

Article 9. Model for preparing a five-year financial plan

1. For the national five-year financial plan, it shall be carried out according to models from number 01 to number 04 as prescribed in Resolution No. 343/2017/UBTVQH14 of the Standing Committee of the National Assembly.

2. For the provincial and centrally-administered city five-year financial plans, they shall be carried out according to models number 01 and 02 as prescribed in Decree No. 31/2017/NĐ-CP of the Government.

Chapter III

PREPARATION OF A THREE-YEAR FINANCIAL PLAN - STATE BUDGET

Section 1.

PREPARATION OF A THREE-YEAR FINANCIAL PLAN - STATE BUDGET FOR THE NATION

Article 10. Content of the three-year financial plan - state budget for the nation

The content of the three-year financial plan - state budget for the nation shall be implemented according to the provisions of Clause 1, Article 15 of Decree No. 45/2017/NĐ-CP of the Government.

Article 11. Procedures and time for preparing the three-year financial plan - state budget for the nation

1. The procedures for preparing the three-year financial plan - state budget for the nation shall be carried out according to the provisions of Article 16 of Decree No. 45/2017/NĐ-CP of the Government.

2. The time for preparing the three-year financial plan - state budget for the nation shall be carried out according to the provisions of Clauses 2, 3, 4, 6, 7, 8, and 9 of Article 18 of Decree No. 45/2017/NĐ-CP of the Government.

Article 12. Models for reporting the three-year financial plan - state budget for the nation

The models for reporting the three-year financial plan - state budget for the nation shall be carried out according to models from number 09 to number 14 as prescribed in Resolution No. 343/2017/UBTVQH14 of the Standing Committee of the National Assembly.

Section 2.

PREPARATION OF A THREE-YEAR FINANCIAL PLAN - STATE BUDGET FOR PROVINCES AND CENTRALLY-ADMINISTERED CITIES

Article 13. Content of the three-year financial plan - state budget for provinces and centrally-administered cities

The content of the three-year financial plan - state budget for provinces and centrally-administered cities (hereinafter referred to as the three-year financial plan - state budget of the locality) shall be carried out according to the provisions of Clause 2, Article 15 of Decree No. 45/2017/NĐ-CP of the Government, including:

1. The evaluation of the implementation of economic and social tasks and the local budget estimate for the current year must clearly show the degree of completion of the economic and social development goals and the local budget estimate for the current year decided by the Provincial People's Council; at the same time, combining with the results of implementing the local budget in the immediately preceding year, analyzing the trend of local financial and budgetary activities in relation to the implementation of the five-year financial plan goals of the locality in terms of scale and structure of local budget revenue; effectiveness of resource allocation and budget expenditure control; balance situation and work on mobilizing resources to offset the local budget deficit; implementation of management indicators for local debt.

2. Forecasting key economic and social indicators over the three-year planning period focuses on those that significantly impact the local budget; this is based on the economic and social development strategy, plan, or orientation for economic and social development, finance, and public investment for the five-year period of the locality, combined with practical analysis.

3. Forecasting the state budget revenue on the territory and the balanced local budget revenue shall be carried out in accordance with the provisions of the State Budget Law and related laws on taxes, fees, and other collection policies issued by the competent authority; based on evaluating the ability to implement economic and social tasks and the state budget for the current year, forecasting investment conditions, the economic and social plan for the three-year planning period, and the check figures for the planned revenue budget announced by the competent authority; it shall be summarized by each type of revenue and domestic revenue structure, oil revenue, import-export revenue, aid revenue, and detailed annually; accompanied by evaluations and explanations about:

a) Guidelines for adjusting the structure of state budget revenue on the local territory; defining and clearly identifying local budget revenue sources and provincial budget revenue sources according to the division of powers;

b) Factors affecting state budget revenue on the local territory, including: Plans, orientations, or forecasts regarding the growth rate of the local economy over the three-year planning period; anticipated changes in tax, fee, and other revenue policies issued by the central government affecting state budget revenue on the local territory; measures for managing tax revenue and strengthening tax inspection, recovery of overdue tax.

4. Preparing the local budget expenditure plan shall be carried out in accordance with the provisions of the State Budget Law and expenditure policies and regulations issued by the competent authority; it shall be detailedly summarized according to the structure of development investment expenditure, regular expenditure, interest payment expenditure, other expenditures, and detailed annually, where development investment expenditure and regular expenditure are detailed according to each spending area based on the provisions of the State Budget Law; accompanied by evaluations and explanations about:

a) Major guidelines for allocating local budget expenditure; principles and criteria for allocating local budgets to each sector and field consistent with the priority policy directions for economic and social development of the locality over the five-year, three-year, and annual periods, while ensuring safe and sustainable budget development;

b) Factors affecting local budget expenditure, including: Changes in plans, orientations, or growth rates of the local economy over the three-year planning period; changes in budget expenditure policies issued by the central and local governments leading to changes in budget expenditure targets; changes due to budget expenditure control process reforms;

c) Anticipated capacity to allocate budgets (budget ceiling) for each sector and field over the three-year planning period and prioritizing budget allocation for each field, program, project, and major expenditure task within the determined budget ceiling.

5. The preparation of the provincial budget expenditure estimate for a three-year plan period shall be compiled according to the structure of investment development expenditure, regular expenditure, interest payment expenditure, other expenditures, and detailed annually, wherein investment development expenditure and regular expenditure shall be detailed by each spending area as prescribed by the State Budget Law; supplementary transfers from the provincial budget to lower-level budgets; accompanied by evaluations and explanations regarding:

a) The anticipated ceiling of budget expenditure for each agency and unit at the first level having a regular relationship with the provincial budget for a three-year plan period, detailed according to the structure of investment development expenditure and regular expenditure, and categorized by each spending area;

b) The anticipated supplementary balance adjustment ceiling and targeted supplementary ceiling from the provincial budget to the district budget for a three-year period, detailed annually and by each city, district, county, and town within the province.

6. The preparation of the excess expenditure or surplus budget estimate of the local government and the borrowing and repayment plans of the local government budget shall be based on: major budget balances in the five-year financial plan of the locality, forecasted revenue and expenditure balances of the local government budget as stipulated in Clauses 3, 4, and 5 of this Article; the medium-term public investment plan from the local government budget for the budget year and the following two years; the outstanding debt of the locality as of December 31 of the current year; the maximum allowable additional borrowing capacity to cover excess expenditure and repay principal of the local government budget each year, ensuring that the local government's debt level at the end of each year and over the three-year plan period does not exceed the limit prescribed in Clause 6 of Article 7 of the State Budget Law and Clause 6 of Article 4 of Decree No. 163/2016/ND-CP of the Government; accompanied by evaluations and explanations regarding:

a) The anticipated need for debt repayment due in the budget year and the following two years (including principal repayment, interest, fees, and related expenses); simultaneously, the anticipated sources for annual debt repayment during the three-year plan period as prescribed by the State Budget Law;

b) The total amount of borrowing by the local government to cover excess expenditure and repay principal over the three-year plan period, clarifying the actual situation of mobilizing various sources of funds (borrowing from local government bond issuance, borrowing from the central government's loans to the locality, borrowing from other domestic sources in accordance with disbursement commitments) in the previous year and the potential for mobilization in the subsequent year; analyzing the impact of different borrowing sources on the local government's debt balance, clarifying the influence of internal and external factors such as: scale of debt, conditions and ability to repay debt, exchange rate fluctuations, and interest rates. In particular:

For principal repayment, localities shall proactively allocate from the sources as prescribed in Clause 1 of Article 5 of Decree No. 163/2016/ND-CP of the Government to fully repay all due principal debts, especially foreign loans repaid by the central government to the locality, in cases where the debt ceiling exceeds the permissible limit prescribed in Clause 6 of Article 7 of the State Budget Law and guiding documents and government decrees on special financial mechanisms for certain localities, localities must allocate local government revenues according to the tiered distribution system, reduce the medium-term public investment plan to increase principal repayment, ensuring that the debt level does not exceed the local government's debt limit as prescribed;

In cases where foreign loans repaid by the central government to the locality or other loans with binding conditions on usage purposes, localities must proactively coordinate with central ministries and agencies or relevant units to complete loan agreement procedures to have a basis for allocating disbursement plans for loan funds, anticipate the disbursement capacity of each loan to develop the borrowing and excess expenditure plan for the local government budget accordingly. In cases where the locality plans to borrow to repay principal (the locality has no excess expenditure or the loan amount is greater than the excess expenditure), but the new loan has binding conditions on usage purposes, then the locality must have a plan to reduce investment development expenditure correspondingly and/or utilize other legitimate financial resources of the locality as prescribed in Clause 1 of Article 5 of Decree No. 163/2016/ND-CP of the Government to repay due principal and use the new loan to offset investment development expenditure;

In cases where the aggregate disbursement plan for foreign loans repaid by the central government to the locality under signed loan agreements causes the local government's debt level to exceed the prescribed limit, the locality must have a plan to increase principal repayment of other debts to ensure the disbursement of foreign funds according to signed agreements, while ensuring that the local government's excess expenditure, total borrowing, and debt level remain within the prescribed limits.

7. The forecasting of risks affecting the local government budget balance framework shall be conducted for the entire three-year plan period and each year, detailed according to each objective and subjective risk factor, thereby evaluating the impact of these risks on the locality's revenue, expenditure, excess expenditure, and debt, specifically:

a) Changes in assumptions about macroeconomic indicators or indicators related to revenue and expenditure that affect the amount of revenue and expenditure, budget tasks, excess expenditure, and the local government's debt level;

b) Changes in mechanisms, policies, or commitments compared to initial planning expectations that affect the amount of revenue and expenditure and generate contingent liabilities for the locality; forecasting the timing, duration, and quantification of the impacts of these effects;

c) Risks from provincial government debt (including construction areas) and their impact on the provincial government's budget balance over the three-year plan period.

8. Proposals for measures to implement the local government's three-year financial-plan, including: measures to strive for increased revenue, strengthen budget expenditure management, and ensure local government budget balance in case of risk occurrence.

Article 14. Procedure and time for preparing the three-year financial-budget plan of provinces and centrally governed cities

1. Before March 31 each year, the Provincial People's Committee shall direct the updating and supplementation of data and the preparation of reports to evaluate the three-year financial-budget plan established in the previous year: three-year state financial-budget plan established in the previous year:

a) Based on the results of implementing the state budget estimate and local budget of the preceding year before the first year of the three-year plan established in the previous year, the current year's estimate, the financial-budget targets and tasks set for the next two years, the Provincial People's Committee shall direct the Department of Finance to take the lead and coordinate with the Department of Planning and Investment, Taxation Service, Customs Service, and other relevant agencies at the locality to update and supplement data and prepare reports to evaluate the three-year financial-budget plan established in the previous year, to be sent to the Ministry of Finance and the Ministry of Planning and Investment for review, consolidation, and determination of ceilings for state budget expenditures for the new three-year planning period; the three-year state financial-budget plan established in the previous year shall be submitted to the Ministry of Finance and the Ministry of Planning and Investment for review, consolidation, and determination of the ceilings for state budget expenditures for the new three-year planning period;

b) On the basis of updating and supplementing data on state budget revenue and other financial resources in the three-year financial-budget plan established in the previous year, adjustments shall be made to the balance of expenditures and the allocation of major expenditure structures of the local budget to be appropriate, serving as the foundation for preparing the three-year financial-budget plan for the new planning period; the three-year state financial-budget plan established in the previous year shall adjust the expenditure balance and the allocation of major budget expenditure structures at the local level to be appropriate, serving as the basis for establishing the state financial-budget plan for the new three-year planning period;

c) The contents of the report to update and supplement the evaluation of the three-year financial-budget plan established in the previous year include:

Updating data and supplementing evaluations on the implementation of economic and social tasks of the locality in the preceding year; preliminary estimates of the ability to implement economic and social tasks of the locality in the current year and forecasts for the next two years; comparing with the economic and social goals and indicators of the locality established in the previous year, accompanied by detailed explanations for significant changes affecting the local budget (if any);

Updating data and supplementing evaluations on the implementation of the state budget estimate and local budget in the preceding year; initial assessments of the ability to implement the state budget and local budget in the current year across areas such as state budget revenue within the locality and balanced local budget revenue, supplementary balanced transfers and targeted supplementary transfers from the central budget to the local budget, balanced local budget expenditures, local budget deficit or surplus, debt ratio and management indicators of the local budget;

Preliminary estimates of additional and adjusted (if any) revenues and expenditures of the local budget for the next two years, accompanied by detailed explanations of factors affecting changes in the estimated local budget revenues and expenditures, and changes in budget allocation priorities according to sectors, programs, projects, and major expenditure items compared to the three-year financial-budget plan established in the previous year;

Preliminary estimates of additional and adjusted (if any) balanced local budgets, changes in debt stock and debt structure, sources of repayment; predictions of newly emerging risks (if any).

2. Before July 20 each year, based on the Prime Minister's Directive and guidance from the Ministry of Finance and the Ministry of Planning and Investment on preparing the three-year financial-budget plan; on the basis of the updated and supplemented report evaluating the three-year financial-budget plan established in the previous year as stipulated in Clause 1, Article 5; the Provincial People's Committee shall direct the Department of Finance to take the lead and coordinate with the Department of Planning and Investment, Taxation Service, Customs Service, and other relevant agencies at the locality to prepare the three-year financial-budget plan of the locality, to be submitted to the Standing Committee of the People's Council at the same level for comments to be sent to the Ministry of Finance and the Ministry of Planning and Investment.

3. Based on the revenue and expenditure tasks of the state budget and the amount of supplementary funding from the central budget to the local budget in the projected year (the first year of the new three-year financial-budget plan), which have been approved by the National Assembly and assigned by the Prime Minister; based on the notification of the Ministry of Finance and the Ministry of Planning and Investment regarding the ceilings for supplementary expenditures from the central budget to the local budget and their comments on the content of the subsequent three-year financial-budget plan; the Provincial People's Committee shall direct the Department of Finance to incorporate and complete the three-year financial-budget plan of the locality to be submitted to the People's Council at the same level for reference during discussions, examination, and approval of the annual budget estimate and local budget allocation plan.

Article 15. Template for reporting the three-year financial plan - state budget of provinces and centrally governed cities

The template for reporting the three-year financial plan - state budget of localities shall be implemented according to templates from number 07 to number 11 prescribed in Decree No. 31/2017/NĐ-CP of the Government and templates from number 01 to number 12 annexed to this Circular.

Section 3

PREPARATION OF THE THREE-YEAR FINANCIAL PLAN - STATE BUDGET OF MINISTRIES, CENTRAL AGENCIES AND PROVINCE LEVEL AGENCIES AND UNITS

Article 16. Content of the three-year financial plan - state budget of ministries, central agencies and province level agencies and units

The content of the three-year financial plan - state budget of ministries, central agencies and province level agencies and units (hereinafter referred to as agencies and units) shall be carried out in accordance with Clause 3, Article 15 of Decree No. 45/2017/NĐ-CP of the Government, including:

1. Evaluation of the situation in implementing the main objectives, tasks and state budget revenue and expenditure estimates of agencies and units in the current year, focusing on clarifying:

The ability and extent of completing the assigned objectives, tasks and state budget revenue and expenditure estimates; existing shortcomings, limitations and their causes;

Reviewing basic expenditures, eliminating one-time expenses, adjusting expenditures for programs, projects, and tasks that have been decided but did not achieve the desired results to higher-priority programs, projects, and tasks; thereby determining the basic expenditure levels for the budget year and the following two years of the agency or unit;

For sector management agencies, national target program management agencies, and program management agencies, in addition to evaluating the objectives, tasks, and state budget estimates directly managed and implemented by their own agencies, they also need to evaluate the ability to implement the objectives and tasks of their sectors, national target programs, and programs assigned to them;

2. Forecasting the main emerging objectives and tasks of agencies and units during the three-year planning period and proposing state budget requirements for implementation:

a) The main emerging objectives and tasks of agencies and units must closely align with the economic and social development goals, directions, and sectors or fields proposed for the five-year period; legal and practical bases for implementation, detailed into specific activities;

b) State budget requirements for implementing emerging objectives and tasks are new expenditures of agencies and units during the three-year planning period, ensuring compliance with the provisions of the State Budget Law, state budget expenditure policies and regulations issued by competent authorities; detailed by expenditure areas and investment development structure, regular expenditure;

3. Aggregating state budget requirements of agencies and units:

a) Based on the ceiling of state budget expenditures announced by the finance department and the planning and investment department; the basic expenditure level and new expenditure proposals determined in accordance with Clause 2 of this Article; agencies and units determine their investment development funding needs from the state budget and regular expenditure needs for the budget year and the following two years, detailed by expenditure areas, basic expenditures, and new expenditures as stipulated in Article 17 of this Circular; based on which, aggregate the state budget requirements of agencies and units over the three-year planning period;

b) During the aggregation of state budget requirements, agencies and units must proactively arrange and review expenditure tasks so that expenditure requirements fall within the announced state budget ceiling, ensuring tight and effective basic expenditures and allocating appropriate funds for new expenditures:

In cases where the expenditure requirements of agencies and units exceed the announced state budget ceiling, the finance department and the planning and investment department will coordinate with each agency and unit to handle the situation in accordance with Clause 3, Article 16 of Decree No. 45/2017/NĐ-CP of the Government before aggregating and submitting the three-year financial plan - state budget to the competent authority. Agencies and units with expenditure requirements exceeding the announced ceiling need to clearly analyze the reasons for increased expenditure requirements and simultaneously propose financial solutions to achieve assigned objectives and tasks, such as reviewing and prioritizing expenditure requirements; cutting funding for ineffective ongoing tasks, activities, systems, and policies to adjust or replace them with more effective ones; recommending or issuing new mechanisms and policies to mobilize additional financial resources outside the state budget;

In cases where expenditure requirements of agencies and units are guaranteed from retained fee revenues and other operating income as prescribed, the projected revenues must be detailed annually, along with relevant evaluations and explanations;

c) The report on state budget expenditure requirements of agencies and units must be accompanied by explanations regarding the principles and criteria for allocating the budget to subordinate agencies and units; prioritizing budget allocation and other financial resources for key programs, projects, and tasks; forecasting potential risks in implementing the plan, including outstanding debts and contingency reserves; organizational measures for implementing the three-year financial plan - state budget of agencies and units.

Article 17. Determining the demand for investment development expenditure and regular expenditure of agencies and units over a three-year plan period.

1. Determining the demand for investment development expenditure:

The demand for investment development expenditure of agencies and units in the planning year equals the total investment development expenditure based on the foundation and new investment development expenditure in that year, detailed annually and according to each budget sector prescribed in Clause 3, Article 3 of Decree No. 163/2016/ND-CP of the Government; accompanied by explanatory documents regarding the progress or plans for implementation of related projects.

Example 6: Combining the hypotheses presented in Example 1 at Clause 1, Article 5 and Example 3 at Clause 1, Article 6 of this Circular, the demand for investment development expenditure in the economic activity field of Agency A in the three-year state financial and budget plan from 2018 to 2020 is determined as follows:

Unit: million dong

2. Determining the demand for regular expenditure:

The demand for regular expenditure of agencies and units in the planning year equals the total regular expenditure based on the foundation and new regular expenditure in that year, detailed annually and according to each budget sector prescribed in Clause 3, Article 3 of Decree No. 163/2016/ND-CP of the Government; accompanied by relevant explanatory documents.

Example 7: Combining the hypotheses presented in Example 2 at Clause 2, Article 5 and Example 5 at Clause 2, Article 6 of this Circular, the demand for regular expenditure in the administrative management field of Agency A in the three-year state financial and budget plan from 2018 to 2020 is determined as follows:

Unit: million dong

Article 18. Procedures and time limits for compiling the three-year state financial and budget plan of ministries, central agencies, and provincial-level agencies and units.

1. Before March 31 each year, agencies and units shall update and supplement data and submit reports for evaluation. three-year state financial-budget plan established in the previous year:

a) Based on the results of implementing the state budget tasks of the previous year before the first year of the three-year plan compiled last year, the current year's state budget estimate assigned, and the goals and tasks set for the next two years, agencies and units shall update and supplement data and submit reports for evaluation of the three-year state financial and budget plan compiled last year, to be sent to the finance agency and the planning and investment agency for review, consolidation, and determination of the ceilings for state budget expenditures for the new three-year plan period;

b) Updating and supplementing data and submitting reports for evaluation of the three-year state financial and budget plan compiled last year aims to identify and promptly adjust the sources of revenue and expenditure tasks of agencies and units to better meet the requirements of professional work and serve as a basis for compiling the new three-year state financial and budget plan;

c) The contents of the report updating and supplementing the evaluation of the three-year state financial and budget plan compiled last year by agencies and units include:

Re-evaluating the contents of basic expenditure and new expenditure of the current year, detailed according to investment development expenditure, regular expenditure, and each budget sector, ensuring consistency with the approved budget estimates; based on this, re-evaluating the contents of basic expenditure and new expenditure of the next two years, detailed according to investment development expenditure, regular expenditure, and each budget sector;

On the basis of updating and supplementing data on state budget revenue and expenditure and other financial resources of agencies and units in the three-year state financial and budget plan compiled last year, propose adjustments to the demand for state budget expenditure for the next two years (if necessary), detailed according to investment development expenditure, regular expenditure, and each budget sector, accompanied by specific explanations of factors affecting changes in the demand for state budget expenditure compared to the three-year state financial and budget plan compiled last year;

Example 8:The investment development expenditure budget for the economic activity field in 2018 assigned by the competent authority to Agency A is 60.5 billion VND, a reduction of 16 billion VND from the unit's proposal, of which 20 billion VND is allocated for the implementation of Project IV and no funding is allocated for the feasible preparatory Project V because it is not yet urgent. At the same time, the ceiling for investment development expenditure announced by the finance department for Agency A in 2019 is 100 billion VND, and in 2020 is 55.5 billion VND.

Assuming that the basic data (total approved capital, implementation period) of the projects remain unchanged; the disbursement capacity of projects using domestic funds in 2018 reaches 100% of the assigned plan, while the project using World Bank loans has the potential to exceed the assigned plan by about 2 billion VND. In this case, the three-year state financial and budget plan 2018-2020 of Agency A will be updated and supplemented as follows:

Unit: million dong

2. Before July 20 each year, based on the Prime Minister's Directive and guidance from the Ministry of Finance and the Ministry of Planning and Investment, ministries and central agencies managing national target programs and programs on compiling the three-year state financial and budget plan; ceilings for state budget spending on investment development and regular tasks announced by the Ministry of Finance and the Ministry of Planning and Investment; agencies and units compile their own three-year state financial and budget plans, to be submitted to the finance agency and the planning and investment agency at the same level for consolidation, to prepare the three-year state financial and budget plan for reference by the competent authority when discussing, reviewing, and approving the annual budget estimate and budget allocation plan.

Article 19. Form for reporting the three-year state financial-budget plan of ministries, central agencies, and provincial agencies and units

The form for reporting the three-year state financial-budget plan of agencies and units shall be carried out according to forms numbered from 13 to 22 annexed hereto.

Chapter IV

IMPLEMENTING PROVISIONS

Article 20. Transitional Provisions

1. The preparation of the three-year state financial-budget plan 2018-2020 shall be conducted in accordance with the provisions of Article 20 of Decree No. 45/2017/NĐ-CP of the Government and closely linked to the preparation of the 2018 state budget estimate by ministries, agencies, units, and localities.

2. Forecasting economic and macro-financial trends and important macroeconomic indicators over the period of 2018-2020 shall be stipulated in the Prime Minister's Directive and guidelines provided by the financial agency, planning and investment agency on the preparation of the 2018 socio-economic development plan, the 2018 state budget estimate, and the three-year state financial-budget plan 2018-2020.

Article 21. Guidance at the local level

Based on the provisions of Clause 5 of Article 17 of Decree No. 45/2017/NĐ-CP of the Government and the guidance provided herein, the People's Committees of provinces and centrally governed cities shall organize the guidance on the preparation of the three-year state financial-budget plan of their locality, in accordance with actual conditions.

Article 22. Effectiveness

This Circular takes effect from August 22, 2017 and applies from the 2017 fiscal year.

During implementation, if there are any difficulties, ministries, central agencies, and localities are requested to report to the Ministry of Finance for research and resolution./.