Circular No. 80-TC/KBNN guides the management, allocation, and lending of State budget funds according to Decision No. 556/TTg dated September 12, 1995 of the Prime Minister.

CIRCULAR
MINISTRY OF FINANCE DECREE NO. 80 TC/KBNN ON NOVEMBER 9, 1995 GUIDING THE MANAGEMENT OF ISSUANCE AND LOANS OF STATE BUDGET FUNDS ACCORDING TO THE PRIME MINISTER’S DECISION NO. 556/TTG ON SEPTEMBER 12, 1995 

To implement Decision No. 556/TTg dated September 12, 1995 of the Prime Minister on adjusting Decision No. 327/CT dated September 15, 1992 of the Chairman of the Council of Ministers (now the Prime Minister), after reaching consensus with relevant state agencies, the Ministry of Finance guides the management of issuance and loans of State budget funds for projects under Program 327 as follows:

PART I: GENERAL PROVISIONS

1/ The State budget (central budget) invests in projects under Program 327 including investment grants, operational funds, and interest-free loans which are balanced within the annual State budget approved by the National Assembly.

2/ Based on the national plan indicators allocated to Program 327, the Ministry of Finance issues grants and loans to projects that have been approved by competent authorities through the State Treasury system. The State Treasury is directly responsible for managing the issuance and loans, organizing inspections and controls over the use of funds by project owners, and recovering loans fully and on time.

3/ Unissued and unloaned Program 327 funds from the previous year may be carried forward to the next year for issuance and loaning according to the plan approved by competent authorities.

4/ The supervisory agency of the project owner (ministries, ministerial-level agencies, and government-affiliated agencies for centrally managed projects; provincial People's Committees for locally managed projects) is responsible for allocating plan indicators to each project within the announced national plan; guiding and directing project owners to implement according to the approved plan. The allocation of capital must ensure the proportionate structure of investment funds for forestry, infrastructure, loans, and operational funds as prescribed by the Government and guided by the Ministry of Planning and Investment.

5/ Project owners shall open accounts at the State Treasury to receive grants and loans, and are responsible for managing and using funds for their intended purposes effectively, repaying loans fully and on time, complying with current financial regulations, and being subject to inspection and control by the State Treasury. The State Treasury has the right to refuse issuance and loans to projects that do not meet conditions and to recover funds misused by project owners.

PART II - SPECIFIC PROVISIONS

I: SCOPE AND OBJECTS OF GRANTS AND LOANS

1: Scope and Objects Eligible for Grants

1.1: Projects in the forestry-agriculture-industry sector implementing the following tasks:

- Planting new special-use forests and protective forests to form contiguous protective forest areas.

- Protecting and nurturing special-use forests and protective forests only in vulnerable areas where shifting cultivators are still cutting down forests for swidden fields.

- Constructing certain infrastructure facilities such as transportation, wells, schools, health stations, etc., serving the project area directly.

1.2: Projects in the agriculture-forestry-industry sector implementing the following tasks:

- Planting new protective forests.

- Protecting and nurturing protective forests.

- Constructing certain infrastructure facilities such as transportation, wells, schools, health stations, etc., serving the project area directly.

1.3: Planting new production forests, scattered forests, planting industrial crops, fruit trees, pure pastures for livestock breeding, and independent resettlement projects do not fall within the scope of Program 327 investments.

2: Scope and Objects Eligible for Loans

2.1: The central budget provides preferential loans (interest rate = 0%) for quantities of work included in approved projects, including: Costs for planting and caring for crops (industrial crops, fruit trees, specialty crops) and initial livestock breeding costs until the harvest period according to the economic and technical cycle of each crop and animal.

2.2: Depending on the nature and characteristics of the project, the direct recipients of loans from the State Treasury are households within the project area (according to a specific list provided by the project owner) or the project owner who receives funds to lend to households (without charging any fees) under the supervision of the State Treasury.

3: Scope and Objects Eligible for Operational Economic Grants

3.1: Population transfer, reception, and dispersion activities under Program 327 will be funded according to the standards and rates set by the Ministry of Labor, Invalids, and Social Affairs.

3.2: Project Management

a: Agencies receiving project management funds include:

- The Central Steering Committee for Program 327

- The supervisory agency of the project owner

- The State Treasury system

- Relevant central and local agencies directly involved in implementing projects under Program 327

- The Project Management Board

Project management funds for these agencies are implemented according to the national plan indicators assigned, ensuring the ratio specified in Article 4 of Decision No. 556/TTg dated September 12, 1995 of the Prime Minister.

b: Project management funds are used for the following tasks:

- Project review and approval

- Training, inspection, survey, propaganda, commendation, and summary meetings.

- Agricultural and forestry extension, technology transfer model construction.

- Supplementing some equipment and office supplies for general management activities.

- Expenses for project management operations of the Project Management Board, including allowances, subsidies, travel expenses, etc., according to administrative and operational regulations.

- Expenses for the management, issuance, lending, and debt recovery operations of the State Treasury.

II: CONTENT AND PROCEDURE FOR ESTABLISHING PLANNING ISSUANCE AND LOANING

1: Annual Plan Establishment

1.1: The supervisory agency of the project owner bases on the annual plan volume to establish the plan (including: Project directory, volume and total amount of grants and loans) and sends it to the Ministry of Planning and Investment and the Ministry of Finance for comprehensive balancing and submission to the State for approval. The calculation and establishment of the grant and loan plan must be based on current unit prices and norms.

1.2: Based on the national plan indicators assigned, the total amount of grants and loans, and the project directory announced by the Ministry of Planning and Investment, the supervisory agency of the project owner allocates grant and loan indicators to each project within its management scope and sends them to the Ministry of Finance (Central State Treasury) using Form No. 01.

1.3/ BASED ON THE PLANNING INDICATORS ANNOUNCED BY THE MINISTRY OF PLANNING AND INVESTMENT, THE MINISTRY OF FINANCE (STATE TREASURY) SHALL ALLOCATE FUNDS TO EACH PROJECT OF THE MINISTRIES, PROVINCE PEOPLE'S COMMITTEES, AND CITY PEOPLE'S COMMITTEES, AND THEN ANNOUNCE SUCH FUNDS TO THE PROVINCIAL AND CITY STATE TREASURIES FOR ISSUING FUNDS AND PROVIDING LOANS.

2/ TRANSFER FUNDS FOR ISSUANCE AND LOANS:

- BASED ON THE TOTAL AMOUNT OF FUNDS OF PROGRAM 327 LISTED IN THE ANNUAL PLAN, THE MINISTRY OF FINANCE SHALL TRANSFER FUNDS MONTHLY (INCLUDING FUNDS FOR INVESTMENT PROJECTS, FUNDS FOR PUBLIC SERVICES 327, AND FUNDS FOR LOANS) TO THE STATE TREASURY AT THE CENTRAL LEVEL THROUGH PAYMENT ORDERS.

- BASED ON THE APPROVED ANNUAL PLAN, THE SITUATION OF FUNDS ISSUANCE AND LOANS IN LOCALITIES, THE STATE TREASURY AT THE CENTRAL LEVEL SHALL DISTRIBUTE AND TRANSFER FUNDS TO THE PROVINCIAL AND CITY STATE TREASURIES UNDER THEIR DIRECT MANAGEMENT, SUPERVISION, AND REVIEW OF FUNDS ISSUANCE AND LOANS TO PROJECT MANAGERS, AND IMPLEMENT DEBT COLLECTION AS REGULATED.

3/ FUNDS ISSUANCE AND LOAN PAYMENTS AT THE LOCAL STATE TREASURY

3.1/ FUNDS ISSUANCE

a/ PRINCIPLES OF FUNDS ISSUANCE

- FOR FORESTRY INVESTMENTS:

+ FUNDS FOR ENCLOSURE AND PROTECTION OF FORESTS SHALL BE ISSUED MONTHLY

+ FUNDS FOR FOREST PLANTING SHALL BE ISSUED IN STAGES ACCORDING TO TECHNICAL PHASES, INCLUDING:

* PREPARATION OF SEEDLINGS, FERTILIZERS, AND OTHER CONDITIONS FOR FOREST PLANTING.

* IMPLEMENTATION OF FOREST PLANTING.

* CARE AND PROTECTION IN THE FIRST YEAR.

TO ISSUE FUNDS TIMELY, THE STATE TREASURY SHALL ADVANCE 70% OF THE APPROVED BUDGET FOR EACH TECHNICAL PHASE. WHEN THE PROJECT MANAGER MOVES TO THE NEXT PHASE, THEY MUST COMPLETE THE QUANTITY ACCEPTANCE AND PAYMENT FOR THE PREVIOUS PHASE. THE STATE TREASURY SHALL CHECK THE COMPLETED QUANTITY AND PAY THE REMAINING 30%, AND ADVANCE FUNDS FOR THE NEXT PHASE.

- FOR INFRASTRUCTURE AND PUBLIC WELFARE INVESTMENTS, THERE ARE TWO TYPES SPECIFICALLY AS FOLLOWS:

+ FOR CONSTRUCTION PROJECTS WITH AN INVESTMENT CAPITAL UNDER 150 MILLION, THE PROJECT MANAGER IS PERMITTED TO USE STANDARD DESIGNS. THE STATE TREASURY SHALL ISSUE FUNDS BASED ON THE COMPLETED QUANTITY ACCORDING TO THE A-B ACCEPTANCE DOCUMENT (IN CASE OF INVOLVEMENT OF HOUSEHOLDS, THE ACCEPTANCE IS BETWEEN THE PROJECT MANAGER AND THE HOUSEHOLDS); LEGITIMATE DOCUMENTS WITHIN THE APPROVED BUDGET.

+ FOR CONSTRUCTION PROJECTS WITH AN INVESTMENT CAPITAL OF 150 MILLION OR MORE, FUNDS ISSUANCE SHALL BE MANAGED ACCORDING TO THE CURRENT REGULATIONS ON CONSTRUCTION MANAGEMENT.

- FOR PUBLIC SERVICE FUNDS:

+ FUNDS FOR PROJECT MANAGEMENT COSTS AND EXTENSION SERVICES SHALL BE TEMPORARILY ISSUED MONTHLY. AT THE END OF THE MONTH, THE UNIT THAT RECEIVED FUNDS SHALL SETTLE THE AMOUNT ISSUED WITH THE STATE TREASURY ACCORDING TO THE APPROVED BUDGET AND CURRENT REGULATIONS. AFTER SETTLEMENT, THE STATE TREASURY SHALL ADVANCE FUNDS FOR THE NEXT MONTH.

+ FUNDS FOR POPULATION RELOCATION ACTIVITIES OF PROJECT 327 SHALL BE ISSUED BASED ON THE NUMBER OF HOUSEHOLDS THAT HAVE BEEN RELOCATED INTO THE PROJECT AREA AS LISTED IN THE APPROVED ANNUAL PLAN. THE STATE TREASURY SHALL ADVANCE 50% OF THE FUNDS APPROVED FOR EACH RELOCATION PHASE. AFTER COMPLETING THE RELOCATION, THE PROJECT MANAGER SHALL SUBMIT SETTLEMENT DOCUMENTS CONFIRMED BY THE PROVINCIAL OR CITY POPULATION RELIEF AGENCY FOR ISSUANCE OF THE REMAINING FUNDS AS REGULATED.

+ FUNDS FOR THE MANAGEMENT OF SYSTEM 327 SHALL BE UNIFIEDLY MANAGED AND ALLOCATED BY THE STATE TREASURY AT THE CENTRAL LEVEL FOR USE BY THE PROVINCIAL AND CITY STATE TREASURIES ACCORDING TO THE FINANCIAL MANAGEMENT REGULATIONS.

b/ CONDITIONS FOR FUNDS ISSUANCE

PROJECT MANAGERS SHALL SUBMIT THE FOLLOWING DOCUMENTS TO THE STATE TREASURY WHERE THEY HAVE ACCOUNTS:

- DECISION APPROVING THE PROJECT FROM THE AUTHORIZED BODY.

- DECISION APPOINTING THE PROJECT MANAGER FROM THE AUTHORIZED BODY.

- THE ANNUAL FUNDS PLAN OF THE PROJECT ANNOUNCED BY THE SUPERIOR AUTHORITY OF THE PROJECT MANAGER INCLUDING FORESTRY PLANTING, CARE, AND PROTECTION INDICATORS.

- THE BUDGET AND TOTAL BUDGET (INCLUDING SUPPLEMENTS) APPROVED BY THE AUTHORIZED BODY.

- ECONOMIC CONTRACTS SIGNED BETWEEN THE PROJECT MANAGER AND HOUSEHOLDS (FOR FORESTRY INVESTMENTS), AND WITH CONTRACTORS (IF ANY) AS REGULATED.

- ACCEPTANCE DOCUMENTS BETWEEN THE PROJECT MANAGER AND HOUSEHOLDS AND CONTRACTORS FOR COMPLETED QUANTITIES AND OTHER RELATED DOCUMENTS.

- A LIST OF HOUSEHOLDS FOR RELOCATION WITH CONFIRMATION FROM THE PROVINCIAL OR CITY POPULATION RELIEF AGENCY.

3.2/ LOANS

a/ PRINCIPLES OF LOANS

- LOANS FOR PROJECTS UNDER PROGRAM 327 SHALL BE ACCORDING TO THE APPROVED PROJECT, WITHOUT APPLYING COLLATERAL OR CREDIT GUARANTEES.

- BASED ON THE APPROVED PROJECT, THE SOURCE OF FUNDS FOR LOANS TRANSFERRED BY THE NATIONAL TREASURY, THE STATE TREASURY SHALL DIRECTLY SIGN LOAN CONTRACTS WITH THE PROJECT MANAGERS. THE TOTAL LOAN AMOUNT IN THE YEAR SHALL NOT EXCEED THE APPROVED LOAN PLAN, AND THE LOAN PERIOD SHALL BE DETERMINED BY THE STATE TREASURY BASED ON THE BUSINESS CYCLE AND CAPITAL USE OF EACH PROJECT.

- THE PROJECT MANAGER SHALL BE RESPONSIBLE FOR USING THE LOAN FUNDS FOR THE INTENDED PURPOSES EFFECTIVELY AND REPAYING THE STATE TREASURY AS AGREED.

b/ CONDITIONS FOR TAKING OUT LOANS

TO OBTAIN LOANS, THE PROJECT MANAGER MUST COMPLETE THE FOLLOWING PROCEDURES:

- DECISION APPROVING THE PROJECT FROM THE AUTHORIZED BODY.

- DECISION APPOINTING THE PROJECT MANAGER FROM THE AUTHORIZED BODY.

- THE ANNUAL FUNDS PLAN OF THE PROJECT ANNOUNCED BY THE SUPERIOR AUTHORITY OF THE PROJECT MANAGER.

- SIGN A LOAN CONTRACT WITH THE STATE TREASURY.

- ESTABLISH A LOAN CONTRACT FOR EACH LOAN DRAWDOWN.

c/ ISSUE LOANS, COLLECT DEBTS

- LOAN ISSUANCE SHALL BE DONE IN STAGES ACCORDING TO THE PROJECT PROGRESS. THE STATE TREASURY SHALL ISSUE LOANS DIRECTLY TO HOUSEHOLDS (BASED ON THE PROJECT MANAGER'S LIST) OR ISSUE LOANS THROUGH THE PROJECT MANAGER TO BE DISTRIBUTED TO HOUSEHOLDS. THE PROJECT MANAGER SHALL NOT CHARGE ANY FEES, AND THE STATE TREASURY SHALL MONITOR BEFORE, DURING, AND AFTER THE LOAN. IF FUNDS ARE USED FOR UNINTENDED PURPOSES OR ARE INEFFECTIVE, THE STATE TREASURY HAS THE RIGHT TO SUSPEND FUNDS ISSUANCE AND LOANS, RECALL LOANS EARLIER THAN SCHEDULED, AND REPORT TO THE AUTHORIZED BODY FOR ACTION.

- THE STATE TREASURY SHALL COLLECT LOANS FROM PROJECTS WHEN DUE.

- THE MANAGEMENT AND USE OF RECALLED LOANS WILL BE GUIDED SEPARATELY BY THE MINISTRY OF FINANCE.

PART III - ACCOUNTING RECORDS, AUDITING, REPORTING AND SETTLEMENT

1/ ACCOUNTING RECORDS

- The project sponsors, agencies, and units using State budget capital under Program 327 shall carry out accounting records and statistics in accordance with the current regulations of the State.

- State Treasuries shall conduct accounting records and statistics in accordance with the guidelines of the Central State Treasury.

2/ AUDITING

- The supervisory agencies of the project sponsors, central and local functional management agencies, and State Treasuries shall regularly audit the implementation of plans and financial management systems and the actual implementation of projects by the project sponsors, promptly reflecting any existing issues and difficulties in management to the Ministry of Finance, the Ministry of Planning and Investment, and the Central Steering Committee for Program 327 for appropriate resolution measures.

- Any funds allocated or lent to project sponsors that are found to be misused or improperly utilized through audits and inspections shall be recovered and remitted to the Central State Budget.

3/ REPORTING

- Monthly, the project sponsors are responsible for preparing and submitting reports to the State Treasury where the capital was issued, simultaneously sending them to the project sponsors' supervisory agencies (Form No. 02).

- The State Treasuries issuing the funds are responsible for consolidating and reporting to their superior State Treasuries (State Treasuries at the district and county level report to the State Treasuries at the provincial and municipal levels; State Treasuries at the provincial and municipal levels consolidate and report to the Central State Treasury) on the situation of fund allocation and lending under Program 327 within their jurisdictions.

- Quarterly, based on the reports from the State Treasuries, the Central State Treasury will consolidate the situation of fund allocation and lending implementation nationwide and report to the Ministry of Finance, the Ministry of Planning and Investment, and the Central Steering Committee for Program 327.

4/ ANNUAL CAPITAL SETTLEMENT AND PROJECT COMPLETION SETTLEMENT

4.1/ ANNUAL CAPITAL SETTLEMENT

- The project sponsors are responsible for settling the use of allocated and lent capital with the State Treasury where the capital was issued, and reporting to their superior supervisory agencies.

- The State Treasuries are responsible for consolidating the settlement of allocated and lent capital for Program 327 projects and sending it to their superior State Treasuries; State Treasuries at the district and county level send to the State Treasuries at the provincial and municipal levels; State Treasuries at the provincial and municipal levels send to the Central State Treasury, simultaneously sending to the project sponsors' supervisory agencies. For projects managed by localities, the State Treasuries at the provincial and municipal levels also report to the People's Committees of the provinces and municipalities.

- The Central State Treasury is responsible for consolidating the settlement of allocated and lent capital for Program 327 projects and the 327 public service capital across the entire State Treasury system, and reporting to the Ministry of Finance for review.

4.2/ SETTLEMENT OF COMPLETED PROJECTS AND PROJECT COMPLETION SETTLEMENT SHALL BE AS FOLLOWS:

- For centrally-managed projects: The project sponsors prepare the final settlement report (with confirmation from the State Treasury where the capital was issued) and submit it to their superior agency. The superior agency of the project sponsor is responsible for reviewing and approving the project sponsor's final settlement report, and consolidating and reporting to the Ministry of Finance (Central State Treasury) and the Ministry of Planning and Investment (Central Steering Committee for Program 327).

- For locally-managed projects: The project sponsors prepare the final settlement report (with confirmation from the State Treasury where the capital was issued) and submit it to the People's Committee, State Treasury at the provincial and municipal levels. The State Treasury will coordinate with the 327 Steering Committee of the province or municipality and relevant sectors to examine the final settlement of the project sponsors and submit it to the Chairman of the People's Committee of the province or municipality for approval, and report to the Ministry of Finance (Central State Treasury) and the Ministry of Planning and Investment (Central Steering Committee for Program 327).

PART IV - IMPLEMENTATION PROVISIONS

This Circular takes effect from January 1, 1996; previous documents that conflict with this Circular shall cease to be effective.

Ministries, ministerial-level agencies, provincial People's Committees under the central government, project sponsors, Departments and Bureaus under the Ministry of Finance, units within the State Treasury system are responsible for implementing this Circular.