Circular No. 77/2004/TT-BTC guides the financial management mechanism and disbursement of the poverty reduction project in the Central Region.

CIRCULAR

Guidelines for financial management mechanisms,

reducing the project budget for poverty reduction in the central region,

__________________________

Based on Loan Agreement No. 1883-VIE(SF) dated April 2, 2002, signed between the Socialist Republic of Vietnam and the Asian Development Bank (ADB) for the Central Region Poverty Reduction Project;

Based on the Financing Agreement signed on May 4, 2004, between the Government of Vietnam and the Asian Development Bank (ADB) regarding the non-reimbursable grant from the United Kingdom's Department for International Development (DFID);

Based on Decree No. 17/2001/NĐ-CP dated May 4, 2001, issued by the Government on the issuance of regulations on the management and use of ODA funds;

Based on Decree No. 52/1999/NĐ-CP dated July 8, 1999, issued by the Government on the issuance of the Investment and Construction Management Regulations; Decree No. 12/2000/NĐ-CP dated May 5, 2000, and Decree No. 07/2003/NĐ-CP dated January 30, 2003, issued by the Government to amend and supplement certain provisions of the Investment and Construction Management Regulations issued together with Decree No. 52/1999/NĐ-CP dated July 8, 1999;

Based on Circular No. 1001/CP-QHQT dated November 6, 2001, issued by the Government approving the Feasibility Study Report  for the Central Region Poverty Reduction Project;

Joint Circular No. 666/2001/TTLT/BKH-UBDTMN-TC-XD dated August 23, 2001, guiding investment and construction management for infrastructure projects under Program 135;

Based on Decision No. 1619/QĐ-UB dated August 5, 2002, of the People's Committee of Quang Tri Province approving the Poverty Reduction Project of Quang Tri Province; Decision No. 515/QĐ-UB dated July 30, 2002, of the People's Committee of Kon Tum Province approving the Poverty Reduction Project of Kon Tum Province; Decision No. 1285/QĐ-UB dated June 19, 2002, of the People's Committee of Quang Binh Province approving the Poverty Reduction Project of Quang Binh Province; Decision No. 2189/QĐ-UB dated August 28, 2002, of the People's Committee of Thua Thien Hue Province approving the Poverty Reduction Project of Thua Thien Hue Province under the Central Region Poverty Reduction Project funded by ADB;

To ensure consistency in the financial management of the Project according to the decentralized model, after consultation with the Ministry of Planning and Investment and the Ministry of Finance, this Circular guides the financial management mechanism for the Central Region Poverty Reduction Project as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

Definitions

The terms and concepts used in this Circular have the same meanings as in the Loan Agreement and are understood as follows:

The international financial institution financing the Project is the Asian Development Bank (ADB) and the United Kingdom's Department for International Development (DFID).

The Loan Agreement is the credit agreement signed between Vietnam and ADB, agreeing that ADB will provide Vietnam (the Borrower) a loan in multiple currencies equivalent to 34,058,000 Special Drawing Rights (SDR) for investment in the Project.

 The Financing Agreement is the Agreement signed on May 4, 2004, between the Government of Vietnam and the Asian Development Bank (ADB) regarding the non-reimbursable grant entrusted by the United Kingdom's Department for International Development (DFID) to finance the Central Region Poverty Reduction Project.  The Project is the Central Region Poverty Reduction Project approved by the Prime Minister at Circular No. 1001/CP-QHQT dated November 6, 2001.

is the overall coordinating body for the Project, responsible for implementing the Project effectively in accordance with the approved objectives.

Ministry of Planning and Investment  The participating provinces include Quang Binh, Quang Tri, Thua Thien-Hue, and Kon Tum. The Provincial People's Committees are the main poverty reduction project managers in their respective provinces, responsible for organizing the implementation of the poverty reduction project within their provincial jurisdictions.

The Central Project Office (CPO) under the Department of Local Economy and Territory, Ministry of Planning and Investment, established by the Ministry of Planning and Investment, is responsible for organizing and coordinating the Project.

The Provincial Project Management Board (PPMB) under the Department of Planning and Investment, established by the People's Committee of the participating provinces, is responsible for organizing the implementation of the Project within the provincial jurisdiction.  The District Technical Support Group is established by the Provincial People's Committee to assist the PPMB in implementing the Project in the district and providing technical assistance to the Village Project Management Boards.

The Village Project Management Board (VPMB) is established by the District People's Committee based on the authorization of the Provincial People's Committee and agreement with the PPMB, to organize the implementation of village sub-projects and other Project activities within the village jurisdiction according to the Project's decentralization.

The Village Supervisory Board (VSB) is established by the District People's Committee based on the proposal of the Village People's Council to monitor the Project's activities within the village.

The Agricultural Bank of Vietnam (ABV) has two functions:

Serving as the bank for the Project for the CPO and PPMB;

Implementing the microfinance component (small-scale credit) through the Central Region Representative Office (CRRO-ABV) under ABV, located in Da Nang;

The Commercial Bank of Vietnam (Da Nang Branch) serves as the bank for the microfinance component implemented by CRRO-ABV.

The Central Region Poverty Reduction Project is funded by state budget resources (SBR), including: ADB loans, DFID grants, and counterpart funds

provided by the central government to the CPO, counterpart funds provided by the provincial government for project activities in the provinces, and contributions from people in the project area.

- State Budget investment from ADB loan: 20 million USD, equivalent to 312 billion VND;

2.1.  2.2. The management and use of ADB loans, DFID grants, and counterpart funds (construction and development capital) shall be carried out in accordance with the current State regulations on investment and construction management, consistent with the provisions of the Loan Agreement and the provisions of this Circular.  The CPO is responsible for managing expenditures and handling procedures for withdrawing ADB and DFID funds and counterpart funds for the Project's activities it implements; compiling the implementation and withdrawal situation of the entire Project reported by the PPMBs and CRRO-ABV  to provide to ADB and report to the Government of Vietnam.

2.5. The CPO, PPMBs,

2.3.  are responsible for handling procedures for withdrawing ADB and DFID funds and counterpart funds, managing expenditures, and reporting to the Ministry of Planning and Investment (CPO) and the Ministry of Finance.  report to provide to ADB and report to the Government of Vietnam.

2.4.  The Provincial Project Management Units, the Departmental Project Management Unit of the Ministry of Agriculture and Rural Development shall be responsible for implementing procedures to withdraw ADB funds, DFID funds, and counterpart funds, managing expenditures, settling project activities' payments, and compiling reports to the Ministry of Planning and Investment (Project Management Board at the Central Level), the Ministry of Finance.

2.5. Project Management Board at the Central Level, Provincial Project Management Units,  The People's Committee of the commune (VPĐDKVMT-NHNoN) and the Project Management Board at the commune level (BQLDA xã) are responsible for using the funds in accordance with the approved project objectives, target groups, and content, in compliance with current Vietnamese regulations and the Loan Agreement.

2.6. Counterpart funds for project activities in the four provinces shall be allocated from the provincial budgets participating in the project or raised from other legitimate sources.

2.7. The State Treasury Central Office (KBNN Trung ương) and the State Treasuries of the provinces and districts  participating in the project shall implement oversight  on the disbursement of project funds in accordance with current regulations governing the oversight of state budget fund disbursements. Confirmations from State Treasuries at various levels  on advance payment request forms, payment vouchers for quantity/payment or detailed payment lists, hereinafter referred to as "Payment Vouchers," must clearly specify the counterpart funds at each level of budget and the ADB or DFID funds according to the stipulated financing ratios in the Loan Agreement or Financing Agreement. Payment Vouchers with confirmations from State Treasuries are mandatory documents in the application for ADB and DFID funds and for the disbursement of counterpart funds from the state budget.

2.8. The Vietnam Agriculture and Rural Development Bank (NHNN&PTNT) and the Vietnam Industrial and Commercial Bank (branch Da Nang) shall carry out procedures for withdrawing funds and disbursing ADB/DFID funds in accordance with the provisions of this Circular and shall be entitled to service fees in accordance with the regulations of the State Bank of Vietnam on bank service fees. These service fees will be paid from the interest generated on the Advance Account balance and included in the total investment cost of the Project. In cases where the interest generated on the Advance Account is insufficient or there is no Advance Account (for VPDATƯ), the shortfall will be covered by the project's counterpart funds. Interest generated on the Advance Account will be recorded and monitored separately monthly. Upon completion of the project, the remaining interest generated on the Advance Account will be transferred to the state budget account as directed by the Ministry of Finance.

II. SPECIFIC PROVISIONS

1. Preparation and announcement of the investment capital plan

The Project Management Board at the central level (VPDATW) shall guide the Project Management Boards at the provincial level in preparing the annual financial plans of the project, including ADB and DFID funds, local government counterpart funds, and contributions from beneficiaries as stipulated; consolidate the annual financial plan of the entire project to submit to the Ministry of Planning and Investment, the Ministry of Finance, and ADB.

1.1. By mid-June each year, the Project Management Board at the commune level shall prepare the next year's financial plan for the project within its jurisdiction and send it to the Project Management Board at the provincial level. Subsequently, the Project Management Board at the provincial level shall consolidate and prepare the next year's financial plan for the project within its jurisdiction, consistent with the implementation plan of the project (including operating costs of the Project Management Boards at the provincial and commune levels, commune management boards, and the technical assistance group at the district level). This financial plan shall be sent to the Provincial Department of Planning and Investment, the Provincial Department of Finance, the Ministry of Planning and Investment, and the Ministry of Finance no later than July 20th  of the year preceding the planned year.  1.2. The Project Management Board at the central level (VPDATW) shall prepare the implementation plan for the Microfinance Component (including the plan for withdrawing foreign funds and the counterpart funds arranged by the Vietnam Agriculture and Rural Development Bank according to the project's regulations in each participating province) and send it to the Ministry of Planning and Investment (VPDATW), the Ministry of Finance, and the Project Management Boards at the provincial level for monitoring the implementation

of the Microfinance Component.  1.3. The Project Management Board at the central level (VPDATW) shall prepare the financial plan for activities carried out by the Project Management Board at the central level, while also consolidating the financial plan of the entire project to submit to ADB, the Ministry of Planning and Investment, and the Ministry of Finance.

1.4. The financial plan must fully reflect all sources of funding for the project, including ADB loans, non-reimbursable DFID aid, beneficiary contributions, counterpart funds, and details by work categories, accompanied by explanations of the financial plan content in line with the detailed project work plan.

The provincial project financial plan will be consolidated into the provincial general budget plan to be submitted to the Government and National Assembly for approval in accordance with current regulations. The financial plan for implementing the project by the Project Management Board at the central level will be consolidated into the Ministry of Planning and Investment's budget plan to be submitted to the Government and National Assembly for approval in accordance with current regulations.

After being assigned the annual provincial general budget plan by the Prime Minister, the Department of Finance shall be responsible for coordinating with the Department of Planning and Investment regarding the preliminary allocation of funds   

for each project managed by the province to be submitted by the People's Committee of the province to the People's Council of the province for a resolution on allocating the project capital plan  including the counterpart funds, contributions from beneficiaries, ADB loans, and non-reimbursable DFID aid. Based on the resolution of the People's Council, the People's Committee of the province shall issue a decision on allocating the capital plan and instruct the Department of Finance to inspect and announce the detailed project capital disbursement plan (for each unit) to the provincial State Treasury for the basis of implementing oversight and disbursement during the planning year.  The decision on allocating the project capital plan by the People's Committee of the province shall be sent to the Ministry of Planning and Investment and the Ministry of Finance for consolidation and monitoring of the project implementation situation.

The Ministry of Planning and Investment shall issue a decision assigning the investment capital plan from the counterpart funds and ADB loans for activities carried out by the Project Management Board at the central level. Based on the capital plan assigned to the Project Management Board at the central level, the Ministry of Finance shall verify the validity of the capital plan and notify the Central State Treasury to implement oversight and disbursement during the planning year.

1.6. Based on the announced financial plan of the project, the Project Management Boards at the provincial and commune levels shall organize the implementation of the investment capital plan and prepare quarterly expenditure plans to send to the State Treasury where transactions are conducted; the Project Management Board at the central level shall prepare the annual expenditure plan to send to the State Treasury (where transactions are conducted) to implement the project in the planning year.

2. Advance Accounts and Counterpart Funds Accounts

The Project Management Board at the central level (VPDATW) shall open one counterpart funds account in Vietnamese Dong at the Central State Treasury to receive and settle the counterpart funds provided by the central government budget for the project.

2.1.  The Project Management Board at the provincial level shall open the following accounts:

2.2.   One advance account in US Dollars at the branch of the Vietnam Agriculture and Rural Development Bank in the province to receive the ADB advance funds.

One advance account in US Dollars at the branch of the Vietnam Agriculture and Rural Development Bank in the province to receive the DFID non-reimbursable aid advance funds for project activities in the province.

One counterpart funds account in Vietnamese Dong at the provincial State Treasury to receive and settle the counterpart funds provided by the provincial budget for the project.

The Project Management Board at the commune level shall open the following accounts:

2.3.  Commune Project Management Units shall open the following accounts

An account for provisional advances in Vietnamese Dong at the Branch of the Agricultural Development Bank in the district (the commune-level account) to receive ADB funds from the provincial provisional advance account.

An account for counterpart funds in Vietnamese Dong at the State Treasury in the district to receive and settle counterpart funds provided by the provincial budget for the project.

2.4. The Deposit Office of the Vietnam Agro-Forestry-Fisheries Credit Fund opens the following accounts

An account for provisional advances in US Dollars at the Branch of the Vietnam Commercial Joint Stock Bank in Da Nang to receive ADB funds allocated for the microfinance component.

3. Exchange rates applicable in payment and accounting: Tthe exchange rate for payments and accounting of expenditures from the provincial provisional advance account shall be based on the buying rate of the serving bank at the time of payment. For the commune-level account, the Provincial Project Management Board uses the buying rate of the serving bank at the time of transferring funds into the commune provisional advance account and  this rate will be used when submitting a request to withdraw funds from ADB to replenish the provisional advance account for the amount already spent.   

4. Procedures for controlling expenditures and settling counterpart funds of the project

4.1. Documents and materials provided once

To implement procedures for controlling expenditures, making payments from domestic counterpart funds, and withdrawing foreign funds for the Project, the Project Management Office at the Ministry of Finance sends once to the Ministry of Finance (Department of Foreign Financial Affairs, Central State Treasury), the Provincial Project Management Board sends to the State Treasury of the provinces, and the Commune Project Management Board sends to the State Treasury of the districts the following documents:

Feasibility Study Report of the Poverty Reduction Project in the Central Region and the Prime Minister's Approval Document (except for the Commune Project Management Board).

Decision approving the Poverty Reduction Project of the People's Committee of the province (except for the Commune Project Management Board).

Copy of the Loan Agreement and the Financing Agreement (in case of payments from ADB or DFID funds).

Annual capital plan assigned by the Ministry of Planning and Investment (for the Project Management Office) and annual capital plan assigned by the People's Committees of the provinces (for the Provincial and Commune Project Management Boards);

Investment report accompanied by the Investment Decision of the competent authority (if required to prepare an investment report);

Decisions approving the tender results or decisions awarding direct contracts approved by the competent authority;

Economic contract with the contractor (if any);

Decision of the competent authority approving the contents of the economic contract (if the contractor is foreign) and ADB's approval document for the contract contents (if the contract requires prior ADB approval);

Budget estimates for each item accompanied by the decision approving them by the competent authority;

Performance bond (if any).

4.2. Control and settlement through the National Treasury System

The National Treasury at all levels implements control over expenditures and settlement of foreign funds and domestic counterpart funds of the Project in accordance with current regulations on controlling expenditures from the state budget.

4.2.1  Settlement by the Project Management Office at the Ministry of Finance

4.2.1.1. Payment documents sent to the Central State Treasury: For each payment request, the Project Management Office at the Ministry of Finance sends the Central State Treasury the following documents:

Request for provisional advance (in case of provisional advance payment)

Acceptance certificate accompanied by the calculation table of completed work volume for payment (in case of payment for completed work volume)

Payment voucher

Other supporting documents (for other expenses)

Withdrawal slip  Investment fund/payment mandate (in case of counterpart fund payment).

4.2.1.2.  Within five working days from receipt of valid payment documents, the Central State Treasury will review the documents and confirm on the payment voucher the amount eligible for provisional advance or payment according to the agreed ratio of ADB loan and counterpart funds as stipulated in the Loan Agreement.

The payment voucher confirmed by the Central State Treasury will be issued in five copies to be sent to the Central State Treasury (2), the Department of Foreign Financial Affairs, Ministry of Finance (when submitting a withdrawal request to ADB), the Project Management Office at the Ministry of Finance, and the contractor (if any).

The payment voucher confirmed by the National Treasury is one of the documents for withdrawing ADB funds and settling counterpart funds, specifying each source of funding according to the agreed financing ratio in the Loan Agreement.

At the same time, the Central State Treasury will make the payment  the portion of the Project's own capital as confirmed on the price list.

4.2.2  Payment by the Provincial Project Management Board

4.2.2.1. Payment documentation of the Provincial Project Management Board: For each payment request, the Provincial Project Management Board shall submit a set of payment documentation to the provincial State Treasury where the transaction takes place. The documentation includes the following materials:

Request for provisional advance (in case of provisional advance payment)

Acceptance certificate accompanied by the calculation table of completed work volume for payment (in case of payment for completed work volume)

Price list

Other supporting documents (for other expenses)

Investment withdrawal form/payment mandate (in cases where own capital is paid).

4.2.2.2. Within five working days from the date of receipt of valid payment documentation, the provincial State Treasury will review the documentation and confirm on the price list the amount of funds eligible for provisional advance or payment according to the agreed loan-to-grant ratio of ADB and DFID and own capital as stipulated in the Loan Agreement.  The price list confirmed by the provincial State Treasury will be prepared in seven copies to be sent to: local State Treasury (2), Provincial Project Management Board, Department of Foreign Financial Affairs, Ministry of Finance (when withdrawing ADB and DFID funds), local Provincial National Treasury (when paying from the provisional advance account) and contractor (if applicable).

At the same time, the provincial State Treasury will pay the portion of own capital as confirmed on the price list.  Payment by the Commune Project Management Board:

Payment documentation of the Commune Project Management Board: For each payment request, the Commune Project Management Board shall submit a set of payment documentation to the district State Treasury where the transaction takes place. The documentation includes the following materials:

4.2.3.   Investment withdrawal form/payment mandate (in cases where own capital is paid).

4.2.3.1.  Within five working days from the date of receipt of valid payment documentation, the district State Treasury will review the documentation and confirm on the price list the amount of funds eligible for provisional advance or payment according to the agreed loan-to-grant ratio of ADB and DFID and own capital as stipulated in the Loan Agreement.

Request for provisional advance (in case of provisional advance payment)

Acceptance certificate accompanied by the calculation table of completed work volume for payment (in case of payment for completed work volume)

Price list

Other supporting documents (for other expenses)

The price list confirmed by the district State Treasury will be prepared in seven copies to be sent to: district State Treasury (2), Provincial Project Management Board (2) for Provincial Project Management Board to retain and send to the Ministry of Finance (Department of Foreign Financial Affairs) (when withdrawing ADB and DFID funds), Commune Project Management Board, local Provincial National Treasury (when paying from the provisional advance account) and contractor (if applicable).

4.2.3.2.  At the same time, the district State Treasury will pay the portion of own capital as confirmed on the price list.  5. Withdrawal process, payment of foreign sources of funding

All forms of withdrawal and payment using foreign sources of funding from ADB and DFID are based on payment requests that have been subject to expenditure control and confirmation on the price list by the State Treasury at all levels (except for microfinance components).  Withdrawal of foreign funds is carried out through four forms: Direct payment, Provisional Advance Account, Letter of Commitment, and Refund.

5.1. Direct payment

Direct payment is a form of payment made at the request of the Borrower, where ADB transfers payment directly to the contractor/service provider. This form is typically applied in cases of progress payments under large construction and consultancy contracts or import contracts with small quantities of goods that do not require the issuance of a letter of credit.

To make direct payments in installments, the Provincial Project Management Boards/ Central Project Management Board shall submit payment documentation including the following materials to the Ministry of Finance (Department of Foreign Financial Affairs) to carry out procedures for withdrawing ADB loans/DFID funds:

Request letter

for direct payment withdrawal

Withdrawal application and bank statements in the format prescribed by ADB.  Confirmed price lists (originals)

Invoices/payment requests from the contractor/service provider

Other supporting documents (if any).  Within five working days from the date of receipt of complete and valid payment documentation, the Ministry of Finance (Department of Foreign Financial Affairs) will issue a letter to the Provincial Project Management Boards/Central Project Management Board and the State Bank of Vietnam to jointly sign the withdrawal application and send it to ADB.

ADB will examine and approve the transfer of direct payment to the contractor/service provider.

5.2. Payment procedure via Provisional Advance Account

The withdrawal method via Provisional Advance Account is a form where ADB advances a certain amount of money into the Provisional Advance Account of the provinces (two separate accounts for ADB and DFID funds) to allow the borrower to proactively manage small payments, domestic payments, reduce the number of small direct withdrawal applications sent abroad, shorten the payment processing time, and accelerate project funding.

The maximum limit of the Provisional Advance Account for the entire project is defined in the Loan Agreement. However, depending on the implementation progress and payment needs of the project, the Provincial Project Management Boards may withdraw funds into the Provisional Advance Account at a lower level than the ceiling.

5.2.1. First withdrawal into the Provincial Provisional Advance Account (PAA) and Commune-level Account

5.2.1.1 Provincial Provisional Advance Account

Based on the project's expenditure plan for the next six months in each province, the Provincial Project Management Board shall submit a withdrawal application to the Ministry of Finance (Department of Foreign Financial Affairs). The withdrawal application includes:

Request letter for the first PAA withdrawal

Withdrawal application and bank statement in the format prescribed by ADB

Project expenditure plan for the next six months in the province

Within five working days from the date of receipt of complete and valid documentation, the Ministry of Finance will issue a letter to the Provincial Project Management Board and the State Bank of Vietnam for the State Bank and Provincial Project Management Board to jointly sign the withdrawal application and send it to ADB.

ADB will examine and approve the transfer of funds into the Provincial Provisional Advance Account.  5.2.1.2 Commune-level Account

            Based on the implementation status of the Commune Project Management Board, the Provincial Project Management Board will consider and transfer the initial funds to the Commune-level Account.

5.2.2. Payment from the Provincial Provisional Advance Account and Commune-level Account

When there is a need to make payments using foreign sources of funding (according to the agreed financing ratio for each component), the Provincial and Commune Project Management Boards shall submit a payment mandate along with the confirmed price list to the branch of the State Bank of Vietnam and Provincial National Treasury to request disbursement from the Provincial Provisional Advance Account and Commune-level Account to pay the beneficiaries (contractors, suppliers...).

5.2.3. Supplementing the Provisional Advance Account of the Provincial Project Management Board and the Commune-level Account  5.2.3.1 Commune-level Account  Monthly or when the Commune-level Account has exceeded 50% of the provisional advance ceiling, the Commune Project Management Board shall collect expenditure vouchers, prepare a supplementary withdrawal application to the Provincial Project Management Board to supplement the Commune-level Account.

The supplementary withdrawal application for the Commune-level Account includes:

Request letter for supplementary withdrawal of the Commune-level Account;

Statement of expenditures from the Commune-level Account;

Confirmed price lists by the district State Treasury (arranged in the correct order within each expenditure statement).

When there is a need to make payments from foreign sources (in accordance with the approved funding ratio for each component), the Provincial and Commune Project Management Units shall submit payment orders accompanied by confirmed cost sheets from the State Treasury to the branches of the State Bank of Vietnam and Agricultural Commercial Joint Stock Bank in the province and district to request disbursement from the provincial advance account and commune-level account to pay beneficiaries (contractors, suppliers of goods and services...). 

5.2.3. Supplementing the Provincial Advance Account and Commune-Level Account

5.2.3.1 Commune-Level Account

Monthly or when the commune-level account expenditure exceeds 50% of the ceiling amount temporarily allocated, the Commune Project Management Unit shall collect expenditure vouchers, prepare supplementary withdrawal documentation, and send it to the Provincial Project Management Unit to replenish the commune-level account.

Documentation for supplementary withdrawal of the commune-level account includes:

A letter requesting supplementary withdrawal of the commune-level account;

A statement of account detailing expenditures from the commune-level account;

Confirmed cost sheets by the District State Treasury (to be arranged in the correct order according to each expenditure statement);

The account statement of the advance account related to expenditures provided by the State Bank and Post Office Savings Bank of the district, with confirmation signatures, detailing transactions generating debt, generating credit, and the balance on the advance account in chronological order. These transactions must match the expenditures settled by the Project Management Board at the commune level.

Other documents and materials as requested by the Provincial Project Management Board.

Within five working days from the date of receiving complete and valid files, the Provincial Project Management Board shall proceed to transfer additional funds to the commune-level account.

5.2.3.2 Advance Account of the Provincial Project Management Board

Monthly or when the advance account has been spent over 50% of the ceiling amount, the Provincial Project Management Board shall collect expenditure vouchers, prepare a supplementary withdrawal account file, and send it to the Ministry of Finance (Department of Foreign Financial Affairs). The supplementary withdrawal account file of the Provincial Project Management Board includes:

A letter requesting supplementary withdrawal from the advance account and a withdrawal form according to the ADB model.

A statement of expenditures from the advance account (SOE according to the ADB model).

Price lists confirmed by the provincial Treasury (arranged in the correct order for each expenditure statement).

In cases where expenditures exceed $50,000, the Provincial Project Management Board must also submit contracts, supporting documents, invoices, and receipts or payment vouchers from the contractor for that expenditure.

The account statement of the advance account related to expenditures provided by the State Bank and Post Office Savings Bank of the province/district, with confirmation signatures, detailing transactions generating debt, generating credit, and the balance on the advance account in chronological order. These transactions must match the expenditures settled by the Project Management Board.  at the provincial level.

Within five working days from the receipt of complete and valid settlement files, the Ministry of Finance (Department of Foreign Financial Affairs) will issue a letter approving the request for supplementary withdrawal from abroad according to the procedure for supplementing the advance account, sending it to the Provincial Project Management Board and the State Bank and Post Office Savings Bank so that both can sign the withdrawal form and send it to ADB.

ADB will review,  approve, and transfer additional funds into the Provincial Project Management Board's advance account.

5.3.  Payment according to the refund procedure

Payment according to the refund procedure is a method where ADB finances project expenditures that have already occurred and have been settled by the Project Management Boards at various levels using budget funds or other sources of the Project Owner. This method is typically applied in small procurement payments, management costs, or certain construction items.

To withdraw funds according to the refund procedure, the National Project Management Board or the Provincial Project Management Board shall submit to the Ministry of Finance (Department of Foreign Financial Affairs) a withdrawal file including the following documents:

A letter requesting withdrawal according to the refund procedure.

A withdrawal form and statement according to the ADB model. The withdrawal form must clearly state the name and account number of the entity that has prepaid for the refund claim.

Price lists that  payment  have been confirmed by the Treasury and receipts or payment vouchers from the contractor (in English: Receipt).

Additional supporting documents and materials (if necessary).

Within five working days from the receipt of complete and valid settlement files, the Ministry of Finance (Department of Foreign Financial Affairs) will issue a letter approving the request for supplementary withdrawal from abroad according to the refund procedure, sending it to the State Bank and Post Office Savings Bank to enable them to jointly sign the withdrawal form and send it to ADB.

ADB will review, approve, and transfer the refunded money back to the national treasury (for prepayments from the state budget) or to the Project Owner (for prepayments from self-raised capital).

5.4. Payment according to the Letter of Commitment/Letter of Credit Procedure

Payment according to the letter of commitment procedure involves ADB issuing a letter of commitment guaranteeing payment to a commercial bank for the amount to be paid through a letter of credit (L/C) upon request from the Vietnamese side.

This method is usually applied in the case of import payment via letter of credit (L/C). The process is as follows:

The National Project Management Board or the Provincial Project Management Board shall submit to the Ministry of Finance (Department of Foreign Financial Affairs) a withdrawal file including: a letter requesting withdrawal according to the letter of commitment procedure and a withdrawal form and statement according to the ADB model.

Within five working days from the receipt of complete and valid settlement files, the Ministry of Finance (Department of Foreign Financial Affairs) will issue a letter approving the issuance of the L/C and the request for supplementary withdrawal from abroad according to the letter of commitment procedure, sending it to the National Project Management Board or the Provincial Project Management Board,  and the State Bank and Post Office Savings Bank to enable them to jointly sign the withdrawal form and send it to ADB.   ADB will review, approve the issuance of the letter of commitment, and pay the designated bank the amount specified in the L/C.

5.5. Withdrawal of Funds for Microfinance Component  To implement the credit component, the Microfinance Development Department of the Agricultural Bank of Vietnam (VPĐDKVMT-NHNoN) is temporarily advanced funds equivalent to the three-month credit plan through the advance account of the Microfinance Development Department.

To carry out microfinance activities, the State Bank and Post Office Savings Bank of the provinces involved in the project shall prepare a credit plan (loans in accordance with specific provisions in the Loan Agreement, Project Agreement, and Microfinance Handbook) and submit it to the Microfinance Development Department of the Agricultural Bank of Vietnam (VPĐDKVMT-NHNoN). Based on this credit plan, the Microfinance Development Department of the Agricultural Bank of Vietnam (VPĐDKVMT-NHNoN) will transfer funds to the State Bank and Post Office Savings Bank of the provinces as requested to implement microfinance activities.

The State Bank and Post Office Savings Bank of the provinces participating in the project shall implement loans in accordance with the provisions of the Loan Agreement, Project Agreement, and Microfinance Handbook. Subsequently, the State Bank and Post Office Savings Bank of the province shall prepare a detailed statement of microfinance loan disbursements and send it to the Microfinance Development Department of the Agricultural Bank of Vietnam (VPĐDKVMT-NHNoN) for settlement procedures of the disbursed loans, while also replenishing the funding source for subsequent loan disbursements.

The settlement file of the microfinance loans of the State Bank and Post Office Savings Bank of the provinces serves as the basis for the Microfinance Development Department of the Agricultural Bank of Vietnam (VPĐDKVMT-NHNoN) to process supplementary withdrawal procedures for the microfinance sub-component account.

The ADB withdrawal procedure for the credit component of the project is applied as follows:

For the withdrawal file from ADB to the advance account: The Microfinance Development Department of the Agricultural Bank of Vietnam (VPĐDKVMT-NHNoN) needs to submit to the Ministry of Finance (Department of Foreign Financial Affairs) a withdrawal file including: a letter requesting withdrawal, a withdrawal form according to the ADB model, a statement of the advance account, a list of credit plans, and a report on the use of borrowed funds for the microfinance credit component (excluding the first withdrawal). Within five working days from the receipt of complete and valid settlement files, the Ministry of Finance (Department of Foreign Financial Affairs) will issue a letter approving the request for supplementary withdrawal from abroad according to the procedure for supplementing the advance account, sending it to the Microfinance Development Department of the Agricultural Bank of Vietnam (VPĐDKVMT-NHNoN)

and the Commercial Bank of Vietnam (Da Nang Branch) to sign the withdrawal form and send it to ADB. Afterward, ADB will review and

approve and transfer additional funds into the advance account of the microfinance sub-component.  and the Vietnam Bank for Social Policies (Da Nang branch) to sign the withdrawal request form to be sent to ADB. Subsequently, ADB will review and  approve the transfer of additional funds into the microfinance financial sub-component's advance account.

The documents for withdrawing funds from the advance account to proceed with lending include: a request letter, a notice of receipt, and a notification of buying and selling exchange rates of the Vietnam Industrial and Commercial Bank (Da Nang branch) on the day ADB transfers money, a capital transfer record form of the Ministry of Finance clearly stating the amount in Vietnamese Dong and the date of receiving the debt.

6. Reporting, inspection, auditing, and final accounting regime

6.1. Reporting

Monthly, provincial State Bank and Rural Credit Branches have the responsibility to send statements of the Advance Account to the Provincial Project Management Board, the Treasury (where the project conducts transactions) to monitor income and expenditure through the account using borrowed funds and serve as the basis for recording government budget revenues and expenditures.

Quarterly, the Provincial Project Management Boards have the responsibility to prepare reports on project implementation and financial plan execution  of their respective projects and send them to the Department of Planning and Investment, the Department of Finance, the Treasury, the Ministry of Planning and Investment (VPDATW), and the Ministry of Finance.

Quarterly,

VPDATW has the responsibility to prepare reports on project implementation and financial plan execution under its spending responsibilities, and to compile the overall financial plan execution report of the entire project, and report to the Ministry of Planning and Investment, the Ministry of Finance (Financial Affairs Department and Investment Department).  Quarterly,

the Microfinance Credit Component Implementation Monitoring Board (VPĐDKVMT-NHNoN) has the responsibility to prepare reports on the implementation of the microfinance credit component and send them to the Ministry of Planning and Investment, the Ministry of Finance, and the Provincial Project Management Boards.

Annually, the advance accounts, ledgers, and accounting files of VPDATW and the Provincial Project Management Boards must be audited by an independent auditing company legally operating in Vietnam in accordance with national regulations and ADB requirements.

The selection of the auditing company for VPDATW's activities will be decided by the Ministry of Planning and Investment. The selection of the auditing company for the Provincial Project Management Boards' activities will be decided by the Provincial People's Committee. The selection process must comply with current Vietnamese and ADB regulations. The results of the selection must be approved by the Ministry of Finance and ADB.

Audit reports must be sent to the Ministry of Finance (Financial Affairs Department and Investment Department), the Ministry of Planning and Investment, the Provincial People's Committees, and ADB.

6.3. Inspection

Periodically and unexpectedly, the Ministry of Finance, the Ministry of Planning and Investment, and the Provincial People's Committees will inspect the implementation of the project and the use of funds. If cases of improper use of funds are discovered, the Ministry of Finance will suspend fund transfers and handle violations according to current regulations.  6.4. Final Accounting Report on Investment Capital.

All sub-projects and project activities must prepare annual final accounting reports and final accounting reports upon completion in accordance with current regulations on assignment of tasks and approval authority for final accounting reports.

The Commune Project Management Board is responsible for compiling and finalizing the accounting of assigned activities and sub-projects, submitting to the competent authority for review and approval.

The Provincial Project Management Board is responsible for compiling and finalizing all activities and sub-projects within the province, submitting to the competent authority for review and approval.

VPDATW is responsible for finalizing its own activities and compiling the final accounting report of the entire project for all four provinces, submitting to the Ministry of Planning and Investment, the Ministry of Finance, and the Government for approval.

Procedures for preparing, reviewing, approving, and other issues related to final accounting of investment capital shall be carried out in accordance with Circular No. 45/2003/TT-BTC dated May 15, 2003, issued by the Ministry of Finance guiding final accounting of investment capital (for VPDATW and Provincial Project Management Boards) and Circular No. 106/2003/TT-BTC dated November 7, 2003, issued by the Ministry of Finance guiding management of investment capital for construction projects at commune and town levels, or other supplementary, amended, or replaced circulars.

7. Certain norms applicable to the project.

Operating costs of VPDATW, County Technical Assistance Group, and Provincial Project Management Boards shall be applied in accordance with current regulations on managing basic construction investment projects and Decision No. 112/2001/QĐ-BTC dated November 9, 2001, issued by the Ministry of Finance regarding certain norms for expenses applicable to projects using Official Development Assistance (ODA) loan funds. Funding sources from the counterpart budget of the state budget.

Operating costs of Commune Project Management Boards and Commune Supervision Groups

shall be applied in accordance with Circular No. 12/2000/TT-BXD dated October 24, 2000, issued by the Ministry of Construction guiding management of investment construction cost expenses for infrastructure works under Program 135 as follows: Management and operational costs of Commune Project Management Boards and Commune Supervision Groups are deducted from 3.5% of the approved estimated value of construction and equipment works (for infrastructure works) and the approved model construction estimate on the commune level. The expenditure rules for these costs will be decided by the Provincial People's Committee.  The maximum subsidy rate for commune-level Project Management Board and Supervision Group staff is not more than 50% of the salary               

(in case of兼任职务) and 100% of the salary (in case of专职职务) for equivalent positions at the commune level. The specific subsidy rate will be decided by the Provincial People's Committee.  This Circular takes effect 15 days after its publication in the Official Gazette. Relevant agencies involved in the management and implementation of the project are responsible for organizing the implementation in accordance with the provisions of this Circular. During the implementation process, if there are any difficulties, relevant agencies need to reflect them promptly so that the Ministry of Finance can study, amend, and supplement./. 

III. IMPLEMENTATION

This Circular takes effect fifteen days after its publication in the Official Gazette. Relevant agencies involved in the management and implementation of the project shall be responsible for organizing the implementation in accordance with the provisions of this Circular. Any difficulties encountered during implementation should be promptly reported to the Ministry of Finance for study, amendment, and supplementation./.