Circular No. 88/1998/TT-BTC guides the compensation for interest rate differential on capital mobilization for loans according to the State's investment credit plan for 1998.

CIRCULAR

Guidelines for compensating interest rate differences on capital mobilization for loans under the State's credit investment plan for 1998

Pursuant to Decision No. 52/1998/QĐ-TTg dated March 3, 1998 of the Prime Minister regarding the implementation of the credit investment plan for 1998, the Ministry of Finance provides guidelines for compensating interest rate differences on capital mobilization for loans under the State's credit investment plan for 1998 as follows:

a) Cadres, civil servants, public officials, and workers as stipulated in Article 2 of Decree No. 178/2024/NĐ-CP dated December 31, 2024 (amended and supplemented by Decree No. 67/2025/NĐ-CP dated March 15, 2025) of the Government on policies and treatment for cadres, civil servants, public officials, workers, and armed forces personnel in the process of organizational restructuring of the political system, having a total mandatory social insurance contribution period of at least 15 years when working in heavy, hazardous, or dangerous jobs or extremely heavy, hazardous, or dangerous jobs listed by the agency under the Government responsible for labor administration, or working in areas with particularly difficult socio-economic conditions including time worked in places with regional allowances of coefficient 0.7 or higher before January 1, 2021, and reaching the retirement age as specified in Appendix II issued together with Decree No. 135/2020/NĐ-CP, ceasing work immediately due to direct impact from organizational restructuring and implementation of the two-level local government model;

The subjects eligible for compensation of interest rate differences pursuant to these Circulars are units assigned the task of managing and mobilizing capital for credit investment loans according to the State's plan for 1998 as stipulated in Decision No. 52/1998/QĐ-TTg dated March 3, 1998 of the Prime Minister, including the General Department of Investment Development and the Vietnam Bank for Social Policies.

2. Scope and Principles of Compensation

- Interest rate compensation shall only be provided for investment loans under the 1998 credit investment plan announced by the Ministry of Planning and Investment. The total amount of interest rate compensation annually will be implemented within the budget approved for this purpose.

- The amount of interest rate compensation will be calculated based on the actual outstanding loan balance for investment and the average interest rate of all sources of funds, including those that do not require interest payments (if any). Mobilizing capital from the public for credit investment must ensure the principle of mobilizing only after utilizing all non-interest-bearing or low-interest sources of funds.

3. Method of Compensation

The difference in interest rates will be temporarily compensated quarterly according to the plan; the annual amount of interest rate compensation will be determined after the end of the fiscal year.

3.1. Preparation of the Plan for Compensating Interest Rate Differences

- Based on the credit capital plan allocation indicators for 1998 and the list of investment projects for lending announced by the Ministry of Planning and Investment, the unit responsible for lending shall prepare a plan for mobilizing capital from the public (within the allocated capital range under Decision No. 52/1998/QĐ-TTg dated March 3, 1998 of the Prime Minister), the expected interest rate for mobilization, and determine the proposed interest rate difference compensation amount using the following formula:

Interest rate compensation estimated = Average monthly loan balance x Expected interest rate for mobilization - 0.81% x Loan amount granted in the year (1)

interest rate differential for the loan = floating interest rate - 0.81% x amount of loan granted (1)

+ Average monthly loan balance is the average loan balance forecasted according to the 1998 credit investment plan, calculated as the arithmetic mean between the beginning-of-month and end-of-month balances.

Where:

+ Average monthly interest rate for mobilization is the weighted average expected interest rate of all sources of funds (including non-interest-bearing sources) within the allocated capital range for the 1998 plan.

- Based on the estimated interest rate compensation amount determined by formula (1), the General Department of Investment Development and the Vietnam Bank for Social Policies shall prepare a plan for requesting interest rate compensation for the year, which includes quarterly breakdowns sent to the Ministry of Finance in accordance with the regulations on preparing the state budget to serve as the basis for incorporating into the annual state budget and for temporarily compensating interest rate differences quarterly.

- At the end of each quarter, the Ministry of Finance will base its decision on the interest rate compensation plan and reports on the actual situation of loan capital sources and the implementation of lending in the previous quarter by the unit to temporarily compensate interest rate differences quarterly according to the plan and adjust based on the progress of the previous quarter of the unit.

3.2. Determination of the Actual Amount of Interest Rate Compensation

- The actual annual amount of interest rate compensation is determined using the following formula:

Actual amount of interest rate compensation = Actual outstanding loan balance x Actual interest rate for mobilization - 0.81% x Total loan amount in the year (2)

Balance of debt Number of days in arrears

+ Actual average monthly interest rate for mobilization is the actual weighted average monthly interest rate of all sources of funds (including non-interest-bearing sources) within the allocated capital range for the 1998 credit investment plan. In cases where the Vietnam Bank for Social Policies uses existing capital for lending according to the plan, the interest rate for mobilizing public funds used to calculate the actual average monthly interest rate for compensation purposes is the average annual interest rate for time deposits of one year or longer.

+ Actual outstanding loan balance is the actual outstanding loan balance according to the list announced by the Ministry of Planning and Investment.

- At the end of the fiscal year, the General Department of Investment Development and the Vietnam Bank for Social Policies shall prepare a report requesting interest rate compensation and send it to the Ministry of Finance in accordance with Point 4 of this Circular.

- After verification, the Ministry of Finance will officially determine the actual amount of interest rate compensation. If the amount temporarily compensated during the year is less than the actual amount of compensation, the Ministry of Finance will provide additional compensation for the shortfall. If the amount temporarily compensated during the year exceeds the actual amount of compensation, the excess must be paid into the state budget.

4. Reporting Requirements

Where:

The General Department of Investment Development and the Vietnam Bank for Social Policies are responsible for preparing and submitting the following reports to the Ministry of Finance:

a. Quarterly report including:

A quarterly report on the actual situation of capital sources, capital mobilized from the public for investment lending, outstanding loan balance, actual interest rate difference, and the amount of interest rate difference temporarily compensated (to be submitted in the first month of the next quarter).

b. Annual report to be submitted within the first quarter of the following year including:

+ Situation of capital sources, mobilization of capital from the public for lending according to the designated list.

+ Report on the implementation of lending, outstanding loan balance (in detail by each loan).

+ The amount of interest rate difference temporarily compensated during the year.

+ The actual amount of interest rate difference proposed for compensation for the year.

5. Compensation of Interest Rate Differences for Short-term Credit Investment Loans

The compensation of interest rate differences for short-term credit investment loans from commercial banks according to Decision No. 237/KTTH-Tym dated September 20, 1996 of the Prime Minister shall be carried out in accordance with Circular No. 55 TC/TCDN dated August 18, 1997 of the Ministry of Finance.

+ Report on the implementation of loans, loan balances (in detail according to each loan).

+ Amount of interest rate differential temporarily granted within the year.

+ Actual amount of interest rate differential requested to be compensated for the entire year.

5. Compensation for interest rate differential for investment credit loans from short-term capital sources.

The compensation for interest rate differential for loans from short-term capital sources by commercial banks pursuant to Decision No. 237/KTTH-Tym dated September 20, 1996 of the Prime Minister shall be implemented in accordance with the guidance provided in Circular No. 55 TC/TCDN dated August 18, 1997 of the Ministry of Finance.

6. Implementation organization

- The Vietnam Investment Development General Department and the Vietnam Investment and Development Bank shall be responsible for organizing the implementation of planning, accurately determining the amount of interest rate differential to be compensated, and submitting reports to the Ministry of Finance in accordance with the content and deadlines specified in this Circular.

- Other Credit Organizations, if assigned by the Prime Minister to mobilize capital and provide loans according to the State's investment credit plan, shall also implement in accordance with the provisions of this Circular.

- This Circular shall take effect fifteen days from the date of signature. Any difficulties encountered during implementation should be promptly reported to the Ministry of Finance.