Circular No. 87/2007/TT-BTC guiding the pilot construction of medium-term financial plans and medium-term expenditure plans for the period 2008-2010

CIRCULAR

Guidelines for Pilot Construction of Medium-Term Financial Plans

and Medium-Term Expenditure Plans for the Period 2008-2010

____________

Pursuant to Decision No. 432/QD-TTg dated April 21, 2003 of the Prime Minister approving the Feasibility Report on the Project "Reform of Public Financial Management";

Pursuant to Directive No. 733/CT-TTg dated June 12, 2007 of the Prime Minister on the construction of socio-economic development plans and state budget estimates for 2008;

Pursuant to Circular No. 64/2007/TT-BTC dated June 15, 2007 of the Ministry of Finance guiding the preparation of the state budget estimate for 2008;

The Ministry of Finance guides the work of constructing medium-term financial plans and medium-term expenditure plans for the period 2008-2010 in conjunction with the work of preparing the state budget estimate for 2008 as follows:

A- GENERAL PROVISIONS:

1- Scope of Application: This Circular guides the construction of medium-term financial plans and medium-term expenditure plans for the period 2008-2010 in conjunction with the work of preparing the state budget estimate for 2008, applicable to six ministries: Ministry of Finance, Ministry of Planning and Investment, Ministry of Education and Training, Ministry of Health, Ministry of Agriculture and Rural Development, and Ministry of Transport, and four localities: Hanoi, Ha Tay, Binh Duong, and Vinh Long.

2- Some Concepts and Terminologies:

- Medium-term financial plan is a national or local budget plan for the medium term (from three to five years), starting from the next budget year, prepared annually in a rolling manner. It presents forecasts about the ability to balance revenue and expenditure; principles of balancing to ensure the sustainability of the budget based on economic and social development goals and macroeconomic indicators forecast, current and expected government fiscal and budget policies during the medium term. Additionally, it reflects the priority order of allocating budget resources for each sector and activity within the country or each locality over the medium term. It also outlines key measures to balance expenditure needs and public financial resource capacity, and issues warnings about potential debt.

- Medium-term expenditure plan is a budget expenditure plan for each sector and agency for the medium term (from three to five years), starting from the next budget year, prepared annually in a rolling manner. It presents objectives, tasks, activities, basic and main systems and policies that each sector and agency will implement over the medium term and forecasts financial resources, including specific forecasts of public financial resources. It also reflects the method of determining and prioritizing the implementation of tasks, activities, systems, and policies, and the estimated funding for each task, activity, system, and policy within the predetermined total ceiling. It also outlines key measures to balance expenditure needs and public financial resource capacity, and issues warnings about potential debt.

- Base Expenditure: Refers to expenditures to implement existing tasks, activities, systems, and policies currently being funded by the state budget and committed financially, which must continue to be implemented over the medium term; established based on the ceiling announced by the Ministry of Planning and Investment and the Ministry of Finance.

- New Initiative Expenditure: Refers to expenditures to implement new tasks, activities, systems, and policies, or to expand previously implemented tasks, activities, systems, and policies that have not been financially committed or delayed due to lack of resources but need to continue or complete over the medium term; established based on the ceiling announced by the Ministry of Planning and Investment and the Ministry of Finance.

3- Objectives of Constructing Medium-Term Financial Plans and Medium-Term Expenditure Plans for the Period 2008-2010:

- To construct medium-term financial plans and medium-term expenditure plans for the period 2008-2010 to forecast public financial resources; propose the priority order of allocating resources for each field and task, activity, system, and policy within each field; analyze and propose solutions to achieve the best possible socio-economic development goals set for the period 2006-2010; and contribute to improving the planning and policy formulation process in the medium term and annually in the future.

- To link the construction of medium-term financial plans and medium-term expenditure plans for the period 2008-2010 with the preparation of the state budget estimate for 2008 at some participating ministries and localities for the purpose of evaluating, analyzing, and improving current issues in determining objectives, tasks, activities, systems, and policies; planning and formulating policies in conjunction with the ability to balance the budget for 2008 and the period 2008-2010 to enhance the efficiency of allocating and using state budget resources for national socio-economic development goals.

- The results of piloting the construction of medium-term financial plans and medium-term expenditure plans for the period 2008-2010, together with the results of previous pilot projects according to Decision No. 432/QD-TTg dated April 21, 2003 of the Prime Minister at various ministries and localities, will serve as important grounds for summarizing the implementation of Resolution No. 03/2007/NQ-CP dated January 19, 2007 of the Government on key measures to guide and manage the implementation of the socio-economic development plan and state budget for 2007, thereby providing practical grounds to further refine the model of constructing medium-term financial plans and medium-term expenditure plans linked to annual budget preparation and propose methods to expand the results of this model along with amending and perfecting related legal documents on state finance and budget in the near future.

4- The legal value of the medium-term financial plan and the medium-term expenditure plan for the period 2008-2010:

- The national medium-term financial plan and the national medium-term sectoral expenditure plan for the period 2008-2010 are important documents for the Government to base its examination of the state budget draft and the central government expenditure allocation plan for 2008 before submitting them to the National Assembly.

- The local medium-term financial plan and the local medium-term sectoral expenditure plan for the period 2008-2010 are important documents for the People's Committee at the provincial level to submit to the People's Council at the same level as a basis for examining and approving the local state budget draft and the provincial state budget expenditure allocation plan for 2008.

B - SPECIFIC PROVISIONS:

I. Contents of the medium-term financial plan and the medium-term expenditure plan for the period 2008-2010

1- Contents of the medium-term financial plan for the period 2008-2010:

1.1- The national medium-term financial plan for the period 2008-2010 includes the following main contents:

- Forecasting economic and macro-financial trends and prospects for the medium term 2008-2010; forecasting key macroeconomic indicators for the period 2008-2010 such as gross domestic product (GDP) growth rate, consumer price index, exchange rate, total social investment ratio and structure, export-import turnover growth rate, etc.

- Main socio-economic objectives of the Government for the period 2008-2010, such as growth targets, poverty reduction, job creation, state-owned enterprise reform, etc.

- Principles for preparing and allocating the state budget draft in accordance with the State Budget Law.

- Commitments and agreements of the Government with other countries, organizations, and international financial institutions.

- Framework forecast of revenue-expenditure balance of the state budget for the period 2008-2010, reflecting changes in the budget revenue and expenditure structure, sustainability and proactiveness of the budget, difficulties and risks of the budget:

+ Detailed forecast of state budget revenue by sector for the period 2008-2010 based on tax, fee, and surcharge laws; forecasting prospects for economic growth and anticipated changes in state revenue policy and the effectiveness of state budget revenue management.

+ Anticipated budget deficit level and plans to finance the deficit.

+ Forecast of total state budget expenditure resources by expenditure structure for the period 2008-2010, proposing principles for allocating state budget expenditure to each sector and field based on the Government's priorities for economic and social development policies in the period 2008-2010, anticipating the budget resources that can be allocated to each sector and field in the medium term (expenditure ceiling).

- Anticipated level of government debt and national debt, analyzing and forecasting impacts on macroeconomic indicators.

- Risk forecast of the medium-term financial plan, including risks of forecasting key macroeconomic indicators, risks due to changes in mechanisms and policies, and risks of contingent liabilities.

1.2- The local medium-term financial plan (not detailed for each province, district, commune) for the period 2008-2010 includes the following main contents:

- Forecasting major economic and financial trends and prospects of the locality for the medium term 2008-2010; forecasting key macroeconomic indicators for the period 2008-2010 such as growth rate and structure of agricultural, forestry, fishery, industry-construction, service sectors, total social investment ratio and structure in the locality, etc.

- Main socio-economic objectives of the locality for the period 2008-2010, such as growth targets, poverty reduction, job creation, state-owned enterprise reform, etc.

- Principles and priorities in preparing and allocating the local state budget draft in accordance with the State Budget Law.

- Mechanisms, policies, and guidelines issued by the Central Government applied in the locality, which localities are responsible for implementing.

- Specific commitments and agreements of the locality with central ministries and agencies, organizations, and international financial institutions.

- Framework forecast of revenue-expenditure balance of the local state budget for the period 2008-2010, reflecting changes in the budget revenue and expenditure structure, sustainability and proactiveness of the budget, difficulties and risks of the budget:

+ Detailed forecast of state budget revenue by sector in the locality for the period 2008-2010 based on tax, fee, and surcharge laws; forecasting prospects for economic growth of the locality and anticipated changes in state revenue policy and the effectiveness of state budget revenue management in the locality, clearly defining and determining local budget revenue sources, including provincial-level budget revenue shares according to the decentralization scheme.

+ Plans to mobilize additional resources for development investment in accordance with the State Budget Law, consolidating debt levels and planning resource allocations for debt repayment.

+ Forecast of total local state budget expenditure resources by expenditure structure for the period 2008-2010, proposing principles for allocating local state budget expenditure to each sector and field based on the locality's priorities for economic and social development policies in the period 2008-2010, anticipating the budget resources that can be allocated to each sector and field in the medium term (expenditure ceiling).

- Risk forecast of the medium-term financial plan, including risks of forecasting major macroeconomic indicators of the locality, risks due to changes in mechanisms and policies, and risks of contingent liabilities.

2- Contents of the medium-term expenditure plan for the period 2008-2010:

2.1- Medium-term sectoral expenditure plan for the period 2008-2010:

a) The national medium-term sectoral expenditure plan for the period 2008-2010 includes the following main contents:

- Anticipating changes in state policies and systems during the period 2008-2010 that will affect the activities, tasks, and goals of the sector.

- Objectives, tasks, activities, systems, and priority policies of the sector in the medium term linked to the five-year national economic and social development plans and the sector's development plans.

- Estimate specific sources of revenue (fees, charges, etc.), the amount permitted to be retained for specific tasks of the sector.

- Estimate principles for allocating centralized funds prioritizing key tasks, activities, systems, and policies; estimate allocation of funds for each specific task, activity, system, and policy; allocate funds according to the nature of expenditure (development investment expenditure, recurrent expenditure); estimate clearly basic expenditure and new initiative expenditure based on the ceiling budget level announced by the Ministry of Planning and Investment and the Ministry of Finance. On this basis, estimate the results to be achieved.

- The difference (if any) between the announced budget ceiling and the demand for expenditure (including basic expenditure, new initiative expenditure, price inflation, increased volume, budget adjustment, etc.) to ensure the implementation of tasks, activities, systems, and policies of the sector during the period 2008-2010; the amount of outstanding debt arising after processing within the budget expenditure limit (volume debt, loan debt, advance payment debt, financial obligations arising under regulations but without funding sources); propose measures regarding financial resources to address these issues (reduce funding for ongoing tasks, activities, systems, and policies that are less effective to adjust or replace with more effective new tasks, activities, systems, and policies; propose issuing new mechanisms and policies to mobilize additional resources outside the budget, etc.); issue early warnings about the ability to implement the sector's targets set for the entire period 2006-2010.

- Estimate potential risks of arising prepayment debts, etc.

b) Medium-term expenditure plan for local sector (not detailed for each provincial, district, and commune level) for the period 2008-2010, including the following main contents:

- Estimate changes in central and local policies and systems during the period 2008-2010 affecting the tasks, activities, systems, and policies of the sector at the local level.

- Estimate specific sources of revenue (fees, charges, etc.), the amount permitted to be retained for specific tasks of the sector at the local level.

- Estimate principles for allocating centralized funds prioritizing key tasks, activities, systems, and policies, including estimating allocation of funds for each specific task, activity, system, and policy; allocate funds according to the nature of expenditure (development investment expenditure, recurrent expenditure), clearly distinguishing the source of expenditure implemented by the provincial budget; estimate clearly basic expenditure and new initiative expenditure based on the ceiling budget level announced by the provincial Department of Planning and Investment and the provincial Department of Finance. On this basis, estimate the results to be achieved.

- The difference (if any) between the announced budget ceiling and the demand for expenditure (including basic expenditure, new initiative expenditure, price inflation, increased volume, budget adjustment, etc.) to ensure the implementation of tasks, activities, systems, and policies of the sector at the local level during the period 2008-2010; the amount of outstanding debt arising after processing within the budget expenditure limit (volume debt, loan debt, advance payment debt, financial obligations arising under regulations but without funding sources); propose measures regarding financial resources to address these issues (reduce funding for ongoing tasks, activities, systems, and policies that are less effective to adjust or replace with more effective new tasks, activities, systems, and policies; propose issuing new mechanisms and policies to mobilize additional resources outside the budget, etc.); issue early warnings about the ability to implement the sector's targets at the local level set for the entire period 2006-2010.

- Estimate potential risks of arising prepayment debts, etc.

2.2- Medium-term expenditure plan of the agency (ministry, department) for the period 2008-2010:

a) Medium-term expenditure plan of the ministry for the period 2008-2010, including the following main contents:

- Estimate national policies and systems of the sector during the period 2008-2010 directly impacting the ministry's activities and tasks.

- Estimate specific sources of revenue (fees, charges, etc.), the amount permitted to be retained for specific tasks of the ministry.

- Estimate principles for allocating centralized funds prioritizing key tasks, activities, systems, and policies; estimate allocation of funds for each specific task, activity, system, and policy; allocate funds according to the nature of expenditure (development investment expenditure, recurrent expenditure); estimate clearly basic expenditure and new initiative expenditure based on the ceiling budget level announced by the Ministry of Planning and Investment and the Ministry of Finance. On this basis, estimate the results to be achieved.

- The difference (if any) between the announced budget ceiling and the demand for expenditure (including basic expenditure, new initiative expenditure, price inflation, increased volume, budget adjustment, etc.) to ensure the implementation of tasks, activities, systems, and policies of the ministry during the period 2008-2010; the amount of outstanding debt arising after processing within the budget expenditure limit (volume debt, loan debt, advance payment debt, financial obligations arising under regulations but without funding sources); propose measures regarding financial resources to address these issues (reduce funding for ongoing tasks, activities, systems, and policies that are less effective to adjust or replace with more effective new tasks, activities, systems, and policies; propose issuing new mechanisms and policies to mobilize additional resources outside the budget, etc.); issue early warnings about the ability to implement the ministry's targets set for the entire period 2006-2010.

- Estimate potential risks of arising prepayment debts, etc.

b) Medium-term expenditure plan of the department for the period 2008-2010, including the following main contents:

- Estimate national policies and systems of the sector during the period 2008-2010 directly impacting the department's management activities and tasks at the local level.

- Estimate specific sources of revenue (fees, charges, etc.), the amount permitted to be retained for specific tasks of the department.

- Estimate principles for allocating centralized funds prioritizing key tasks, activities, systems, and policies, including estimating allocation of funds for each specific task, activity, system, and policy; allocate funds according to the nature of expenditure (development investment expenditure, recurrent expenditure); estimate clearly basic expenditure and new initiative expenditure based on the ceiling budget level announced by the provincial Department of Planning and Investment and the provincial Department of Finance. On this basis, estimate the results to be achieved.

- The difference (if any) between the ceiling budget that has been announced and the expenditure needs (including basic expenditures, new initiative expenditures, inflation adjustments, volume increases, budgetary adjustments, etc.) to ensure the implementation of tasks, activities, systems, and policies of the department during the period 2008-2010; the amount of outstanding debts remaining after being processed within the budget expenditure limit (volume debts, loan debts, advance payment debts, financial obligations arising according to regulations but without funding sources); recommendations on financial measures for processing (cutting down expenses of ongoing tasks, activities, systems, and policies that are less effective to adjust or replace with more effective new tasks, activities, systems, and policies; proposing the issuance of new mechanisms and policies to mobilize additional resources outside the budget, etc.); providing early warnings about the possibility of implementing the targets set by the department throughout the period 2006-2010.

- Estimate potential risks of arising prepayment debts, etc.

2.3- Summary of the medium-term expenditure plan for the period 2008-2010:

Is a summary of the medium-term expenditure plan of the sector and the medium-term expenditure plan of the agency for the period 2008-2010, established after completing the medium-term expenditure plan of the sector and the medium-term expenditure plan of the agency for the period 2008-2010 according to the proposal of the planning and investment agency and the finance agency.

II. Basis for building the financial plan and medium-term expenditure plan for the period 2008-2010:

The basis for building the national, sectoral, and local financial plans and medium-term expenditure plans for the period 2008-2010 includes strategies, plans, tasks, programs, and projects for the entire period up to 2010; the economic and social development tasks of the country, sectors, and localities for the entire period up to 2010; the State Budget Law, tax laws, and related guiding documents; current mechanisms and policies that have been approved and anticipated changes in the medium term; forecasts of economic and social development situations and other relevant factors. Below, the Ministry of Finance provides further guidance on some points as follows:

1- Basis for building the medium-term financial plan for the period 2008-2010

1.1- Basis for building the medium-term financial plan at the national level for the period 2008-2010:

- Directions and plans for economic and social development of the country until 2010, including Resolution No. 56/2006/QH11 of the National Assembly of the 11th term on the five-year socio-economic development plan from 2006 to 2010 and the Vietnam Financial Development Strategy until 2010, the Tax System Reform Program until 2010, all approved by competent authorities.

- Forecasts of macroeconomic indicators for the whole country:

+ Forecasted average annual economic growth rate for the period 2008-2010 is 8.5%;

+ Consumer Price Index forecasted to increase at a lower rate than the economic growth rate during the period 2008-2010;

+ Economic structure will shift positively: Increase the share of industry, construction, and services; decrease the share of agriculture, forestry, and fisheries.

+ Export value expected to increase by an average of 17-18% annually, import value expected to increase by an average of 16-17% annually.

- Assumptions related to salary reform during the period 2008-2010:

+ Ceiling expenditure announced for each sector for the period 2008-2010 based on the minimum wage of 450,000 VND (excluding state budget support for salary reform during the period 2008-2010 if applicable);

+ Continue to implement measures to generate funds for salary reform according to current regulations: achieve savings of 10% of regular expenditures (excluding salaries and salary-like allowances) within the announced ceiling expenditure of the sector; use 35-40% of retained revenue according to the system; use part of the increased central government budget revenue and 50% of the increased local government budget revenue.

1.2- Basis for building the medium-term financial plan at the local level for the period 2008-2010:

- Central directives, mechanisms, and policies applied in the locality; directions and plans for economic and social development of the locality until 2010, including the Resolution of the Party Congress of the locality and the Resolution of the Provincial People's Council on the five-year socio-economic development plan of the locality from 2006 to 2010.

- Forecasts of economic and social development indicators of the locality.

- Assumptions related to salary reform during the period 2008-2010:

+ Ceiling expenditure announced for each sector in the locality for the period 2008-2010 based on the minimum wage of 450,000 VND (excluding state budget support for salary reform during the period 2008-2010 if applicable);

+ Continue to implement measures to generate funds for salary reform according to current regulations: achieve savings of 10% of regular expenditures (excluding salaries and salary-like allowances) within the announced ceiling expenditure of the sector; use 35-40% of retained revenue according to the system; use 50% of the increased local government budget revenue.

2- Basis for building the medium-term expenditure plan for the period 2008-2010:

2.1- Basis for building the medium-term expenditure plan at the national level for the sector for the period 2008-2010:

- Strategic development goals of the sector; action plans of the sector to implement Resolution No. 56/2006/QH11 of the National Assembly of the 11th term; anticipated changes in development mechanisms and policies of the sector in the medium term.

- Forecasts of economic and social development indicators related to the implementation of sectoral development goals nationwide.

- Current state regulations on expenditure standards, systems, and policies for the sector.

2.2- Basis for building the medium-term expenditure plan for each sector at the local level for the period 2008-2010:

- Directions and plans for economic and social development of the locality until 2010, including the Resolution of the Party Congress of the locality and the Resolution of the Provincial People's Council on the five-year socio-economic development plan of the locality from 2006 to 2010; action plans of each sector to implement Resolution No. 56/2006/QH11 of the National Assembly of the 11th term.

- Economic and social development goals of the locality related to sectoral development.

- The current general systems, policies, and expenditure standards applicable to the industry and locality.

III. Some requirements for building financial plans and medium-term expenditure plans for the period 2008-2010

1- Reassess budget allocation priorities:

- To build financial plans and medium-term expenditure plans for the period 2008-2010, ministries must reassess the implementation of the medium-term expenditure plan for the period 2007-2009 with the goals and tasks set for this period (for localities, assess the implementation of the state budget estimate for the period 2006-2007); evaluate and forecast the context, requirements, and objectives in the new period, on this basis consider adjusting budget allocation priorities.

- To prepare for building the next medium-term expenditure plan, ministries and localities need to carefully review basic expenditures, including eliminating one-time expenses occurring in the current year, while reviewing and considering adjusting expenditures for programs, projects, tasks, policies, and activities that have been decided but have not achieved the desired results in actual implementation to other programs, projects, tasks, policies, and activities with higher priorities. Funding allocation for current programs, projects, tasks, policies, and activities should be based on the assessment of their actual implementation effectiveness.

2- Requirement to ensure the ceiling of state budget expenditures:

- One of the fundamental goals of building medium-term financial plans is to link planning with the state budget's balancing capacity. Therefore, the construction of the state budget expenditure plan must ensure arrangement within the ceiling of expenditures announced by the Ministry of Finance and the Ministry of Planning and Investment.

- Within the announced budget ceiling, ministries, sectors, and localities must proactively arrange and review tasks, activities, systems, and policies to ensure tight and effective basic expenditures, while allocating appropriate funds for new initiatives.

3- Analyze solutions to address deficits, evaluate, and clearly propose measures to handle reserve debts:

- Based on determining the difference between the announced budget ceiling and the expenditure needs, ministries, sectors, and localities must clearly analyze the reasons for the difference and propose clear measures to address the difference so that it can be arranged within the announced expenditure ceiling while ensuring the mobilization of additional resources to implement.

- Implement detailed analysis and classification of reserve debts, on this basis proactively arrange and handle them to gradually reduce reserve debts in the medium term.

4- Establish a comprehensive and timely reporting information system:

To ensure the effective construction and implementation of medium-term financial plans and medium-term expenditure plans, ministries, provincial People's Committees, and participating departments must proactively establish and issue procedures, scope, and content of reports to provide timely and comprehensive relevant information based on their assigned state management functions.

5- Link with the process of building and discussing the state budget estimate for 2008:

The construction of financial plans and medium-term expenditure plans for the period 2008-2010 must be linked to the construction of the state budget estimate for 2008 by ministries, sectors, and localities. The time, procedure, and division of responsibilities for constructing medium-term financial plans and medium-term expenditure plans shall be carried out according to Part IV of this Circular.

IV. Time, procedure, and organization of implementing the construction of financial plans and medium-term expenditure plans for the period 2008-2010:

Implemented in accordance with the provisions of Directive No. 733/CT-TTg dated June 12, 2007 of the Prime Minister on the construction of socio-economic development plans and state budget estimates for 2008 and Circular No. 64/2007/TT-BTC dated June 15, 2007 of the Ministry of Finance guiding the construction of the state budget estimate for 2008. The Ministry of Finance will provide additional guidance on the procedure and organization of implementing the construction of financial plans and medium-term expenditure plans for the period 2008-2010 as follows:

1. In July 2007:

- The Ministry of Planning and Investment announces the ceiling for investment development expenditures of industries and the ceiling for investment development expenditures of four participating ministries for the period 2008-2010; the Ministry of Finance announces the ceiling for regular expenditures of industries and the ceiling for regular expenditures of four participating ministries for the period 2008-2010.

- Provincial People's Committees in participating localities instruct the Department of Planning and Investment to announce the ceiling for investment development expenditures of the locality and the ceiling for investment development expenditures of specialized departments for the period 2008-2010; the Department of Finance announces the ceiling for regular expenditures of the locality and the ceiling for regular expenditures of departments for the period 2008-2010 for participating specialized departments.

2. In July 2007:

- The Ministry of Finance leads and coordinates with the Ministry of Planning and Investment to build the national medium-term financial plan for the period 2008-2010.

- Ministries of Education and Training, Health, Agriculture and Rural Development, and Transport build the medium-term expenditure plan of the sector and ministry for the period 2008-2010 along with the state budget estimate for 2008; report to the Ministry of Finance, the Ministry of Planning and Investment, and the State Audit Office.

- People's Committees of localities: Hanoi, Ha Tay, Binh Duong, Vinh Long organize the construction of medium-term financial plans and medium-term expenditure plans for the period 2008-2010 in their respective localities:

+ Direct the Department of Finance to lead and coordinate with the Department of Planning and Investment to build the medium-term financial plan for the locality for the period 2008-2010.

+ Direct the four departments: Education and Training, Health, Agriculture and Rural Development, and Transport (Public Works) to build the medium-term expenditure plan of the sector and department for the period 2008-2010 along with the state budget estimate for 2008; report to the Department of Finance and the Department of Planning and Investment; send the medium-term expenditure plan of the sector to the four participating ministries.

3. In July and August 2007:

- The People's Committee at the provincial level in participating localities shall organize discussions with the Department of Finance and the Department of Planning and Investment on the medium-term expenditure plan for the period 2008-2010 together with the discussion on the State budget estimate for 2008; assign the Department of Finance to take the lead in compiling the medium-term financial plan to report to the People's Committee at the provincial level for comments from the People's Council at the provincial level to report to the Ministry of Finance, the Ministry of Planning and Investment, and the National Audit Office.

- The Ministry of Finance and the Ministry of Planning and Investment shall organize discussions with the four ministries participating in the pilot program (on the medium-term expenditure plan of the sector and the ministry for the period 2008-2010) and the four localities participating in the pilot program (on the medium-term financial plan at the locality level for the period 2008-2010) together with the discussion on the State budget estimate for 2008.

4. By September 10, 2007, the ministries and localities participating in the pilot program shall complete their medium-term financial plans and medium-term expenditure plans for the period 2008-2010 based on the results of discussions with the finance authorities and the planning and investment authorities to submit to the finance authorities and the planning and investment authorities; the Ministry of Finance shall take the lead in compiling the national-level medium-term financial plan, the national-level medium-term expenditure plan for sectors for the period 2008-2010, and the State budget estimate for 2008 to present to the Government.

5. In December 2007, the ministries and localities participating in the pilot program shall finalize their medium-term financial plans and medium-term expenditure plans for the period 2008-2010 based on the 2008 budget estimate that has been decided upon by the competent authority.

C - IMPLEMENTATION:

1. The Ministries of Planning and Investment, Education and Training, Health, Agriculture and Rural Development, Transport; the People's Committees of the localities: Hanoi, Ha Tay, Binh Duong, Vinh Long, according to their assigned functions and responsibilities, shall be responsible for organizing the development of medium-term expenditure plans or/and medium-term financial plans for the period 2008-2010 together with the time frame for developing the State budget estimate for 2008 as stipulated in this Circular.

2. Assign the Management Board of the Public Financial Management Reform Project to develop and issue a Handbook of Procedures for Compiling Medium-Term Financial Plans and Medium-Term Expenditure Plans for the period 2008-2010 to ensure compliance with the requirements and contents prescribed in this Circular.

3. This Circular shall take effect fifteen days after its publication in the Official Gazette.

During the process of compiling the 2008 State budget estimate linked to the work of developing medium-term financial plans and medium-term expenditure plans for the period 2008-2010 as stipulated in this Circular, if there are any difficulties, the participating ministries and localities are requested to reflect them to the Ministry of Finance for timely resolution.