Circular No. 86/2004/TT-BTC guiding the management of funds raised for investment in infrastructure from provincial budgets and centrally governed cities.

CIRCULAR

Guidelines for managing funds raised for investment in infrastructure by provincial budgets, cities directly under the Central Government

Pursuant to Decree No. 60/2003/NĐ-CP dated June 6, 2003, promulgated by the Government detailing and guiding the implementation of the Law on State Budget;

Pursuant to Decree No. 73/2003/NĐ-CP dated June 23, 2003 of the Government promulgating the Regulation on examination and decision-making of budget estimates and allocation of local budgets, approval of final accounts of local budgets;

Pursuant to Decree No. 141/2003/NĐ-CP dated November 20, 2003 of the Government on the issuance of government bonds, government-guaranteed bonds, and local government bonds;

Pursuant to Decree No. 123/2004/NĐ-CP dated May 18, 2004 of the Government stipulating certain special financial mechanisms for the capital city of Hanoi;

Pursuant to Decree No. 124/2004/NĐ-CP dated May 18, 2004 of the Government stipulating certain special financial mechanisms for the city of Ho Chi Minh;

Pursuant to Decree No. 77/2003/NĐ-CP dated July 1, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance. The Ministry of Finance guides the preparation of budget estimates, management, accounting, and settlement of funds raised for investment in infrastructure by provincial budgets, cities directly under the Central Government as follows:

I. GENERAL PROVISIONS

1. Provincial budgets, cities directly under the Central Government (hereinafter referred to collectively as provincial budgets), when there is a need to invest in construction of infrastructure projects within the scope of provincial budgets that ensure funding but exceed the budget balance capacity of the provincial budget for the year's estimate, may be permitted to raise domestic funds for investment.

2. The list of investment projects within the scope of the aforementioned provincial budgets must be included in the five-year investment plan approved by the People's Councils of provinces and centrally-administered cities; they must be within approved planning, have complete investment and construction procedures according to regulations, and the raised funds must be detailedly allocated to specific projects for monitoring and management.

3. The estimated amount of funds raised must ensure that the total outstanding debt from raised funds (including both previously raised funds and estimated funds to be raised) does not exceed 30% of the annual total domestic investment in construction of basic infrastructure of the provincial budget decided by the People's Councils of provinces and centrally-administered cities (except for Hanoi and Ho Chi Minh City which shall not exceed 100%). The total domestic investment in construction of basic infrastructure of the provincial budget includes:

- Domestic centralized investment in construction of basic infrastructure.

- Investment in construction of basic infrastructure from land use fees.

- Additional stable sources of investment in construction of basic infrastructure from the central budget (if any).

4. The form of raising funds is implemented through issuing investment bonds in accordance with Decree No. 141/2003/NĐ-CP dated November 20, 2003 of the Government on the issuance of government bonds, government-guaranteed bonds, and local government bonds, or raising funds from other lawful financial sources in accordance with current laws.

5. Raised funds are recorded as revenue in the provincial budget and are allocated in the provincial budget to repay (principal, interest, and related costs) annually when due.

6. Local investment projects funded by raised funds are managed in accordance with current regulations on investment and construction management.

II. SPECIFIC PROVISIONS

1. Preparation of fundraising plans:

1.1. When there is a need to raise funds for investment, the People's Committee of the province prepares a fundraising plan to submit to the same-level People's Council for decision; the content of the plan must clearly state:

- The list of investment projects in the five-year plan within the provincial budget guarantee fund that has been approved by the People's Council of the province, including the list of investment projects proposed to raise funds and their economic effectiveness;

- The investment decision of the competent authority regarding the proposed investment projects to raise funds;

- The total amount of funds raised;

- The method of raising funds;

- The interest rate on raised funds and the repayment plan;

(Attached with other documents to explain the fundraising plan clearly).

1.2. After the fundraising plan is decided by the People's Council of the province, the People's Committee of the province must implement the following tasks:

- Prepare a report to send to the Ministry of Planning and Investment and the Ministry of Finance for monitoring and reporting implementation to the Prime Minister.

- Incorporate the expected raised investment funds into the provincial budget revenue estimate and allocate this amount in the expenditure budget to implement projects listed in the approved fundraising investment plan.

Absolutely no allocation of raised funds for purposes other than those decided by the People's Council.

- Based on the fundraising plan and commitments to repay raised funds, the provincial budget annually allocates in the expenditure budget to repay raised funds (principal, interest, and related fees) when due.

2. Management and use of raised funds:

- In principle, the management, payment, and settlement of investment project completion funds for projects funded by raised funds are carried out in accordance with Circular No. 44/2003/TT-BTC dated May 15, 2003 of the Ministry of Finance guiding the management, payment, and settlement of investment and public service funds with investment characteristics and construction from state budget funds; Circular No. 45/2004/TT-BTC dated May 21, 2004 of the Ministry of Finance supplementing and amending some points of Circular No. 44/2003/TT-BTC dated May 15, 2003 of the Ministry of Finance and Circular No. 45/2003/TT-BTC dated May 15, 2003 of the Ministry of Finance on guiding the settlement of investment funds.

- Based on the fundraising plan decided by the People's Council of the province; the Department of Finance coordinates with relevant agencies to raise funds for investment projects, ensuring that the raising of funds aligns with the project implementation schedule to ensure the effective use of raised funds.

Raised funds are deposited into the state budget according to the current state budget classification (Chapter 160 - Type 10 - Clause 05 - Section 086 - Subsection 10) and must maintain detailed records to monitor the raising and use of these funds.

- On the basis of the progress in implementing the projects, the financial agency and the State Treasury shall make provisional payments and disbursements to units in accordance with current regulations on managing and disbursing capital for basic construction investment and shall be accounted for according to the corresponding chapters, types, clauses, sections, and sub-sections of the current state budget classification.

- When the repayment period for mobilized capital arrives, based on the annual budget estimate for debt repayment, the financial agency shall issue payment orders to pay the money to lending organizations or issuing bodies to repay bond purchasers.

When making payments to repay mobilized capital, it shall be accounted for according to the current state budget classification: Chapter 160 - Type 10 - Clause 05 - Section 158 - Sub-section 10 (for principal repayment) and Section 135 - Sub-section 10 (for interest and related fees on borrowed funds).

3. Settlement of Mobilized Capital:

The settlement of investment capital from mobilization shall be carried out in accordance with current regulations on the settlement of investment capital.

The temporarily advanced funds to units that have not yet met the conditions for payment and unspent funds shall be transferred to the next year for continued implementation and shall be consolidated into the next year's settlement in accordance with the provisions of the law.

III. IMPLEMENTATION PROVISIONS:

This Circular shall take effect fifteen days after its publication in the Official Gazette. Any difficulties encountered during implementation should be reported to the Ministry of Finance for review and appropriate amendment.