Circular No. 90/2003/TT-BTC guides the financial management mechanism for the budget development component of the project "reducing poverty in northern mountainous provinces".

CIRCULAR

OF THE MINISTRY OF FINANCE

Guidelines for the financial management mechanism of the budget development component of the project "Reducing Poverty in Northern Mountainous Provinces"

CBASED ON the Loan Agreement number IDA 3572-VN between the Socialist Republic of Vietnam Male and the International Development Association DPROJECT "GREDUCING POVERTY IN NORTHERN MOUNTAINOUS PROVINCES" signed on 6/11/2001;

Pursuant to the Decree No. 77/2003/NĐ-CP dated 1/7/2003 Pursuant to the Government's Decree stipulating the functions, tasks, and organizational structure of the Ministry of Finance;

BASED ON the Government's Decree No. 17/2001/NĐ-CP dated May 4, 2001, stipulating the issuance of the Regulation on Management and Use of Official Development Assistance;

BASED ON the Government's Decree No. 52/1999/NĐ-CP dated July 8, 1999, stipulating the issuance of the Regulation on Investment and Construction Management; Decree No. 12/2001/NĐ-CP dated May 5, 2000, supplementing some provisions of Decree No. 52/1999/NĐ-CP; Decree No. 07/2003/NĐ-CP dated January 30, 2003, amending and supplementing some articles of the Regulation on Investment and Construction Management issued together with Decree No. 52/1999/NĐ-CP dated July 8, 1999, and Decree No. 12/2000/NĐ-CP dated May 5, 2000;a) The specialized department as stipulated in Clause 2, Article 14 of Decree No. 127/2007/NĐ-CP dated August 1, 2007, issued by the Government detailing a number of articles of the Law on Standards and Technical Regulations; BASED ON the Prime Minister's Decision No. 612/TTg dated

Approving the Preliminary Feasibility Study Report of the Project "Reducing Poverty in Northern Mountainous Provinces"; 21/5/2001 BASED ON the Joint Circular No. 666/2001/TTLT/BKH-UBDTMN-TC-XD dated pof the Ministries of Planning and Investment, Ethnic Minorities Commission, Finance, and Construction guiding the management of investment and construction of infrastructure projects under Program 135;

BASED ON the Circular No. 57/2002/TT-BTC dated 23/8/2001 of the Ministry of Finance guiding the financial management mechanism for the Project "Reducing Poverty in Northern Mountainous Provinces";

BASED ON the Document No. 547/CP-HTQT dated May 5, 2003, of the Prime Minister regarding the management and use mechanism of the Development Budget of the World Bank loan project; 28/6/2002 After consultation with the Ministry of Planning and Investment, the Ministry of Finance guides the financial management mechanism for the budget development component of the Project "Reducing Poverty in Northern Mountainous Provinces" as follows:

GENERAL PROVISIONS:

1. Explanation of terms: The concepts and terms used in this Circular have the same meanings as in the Loan Agreement, specifically as follows: N |||The International Financial Institution financing the Project is the International Development Association.

I. The Project Owner is the Ministry of Planning and Investment, People's Committees of Hoa Binh, Son La, Lao Cai, Yen Bai, Phu Tho, and Bac Giang provinces. To implement the project and coordinate activities within the Project, the Project Owners establish the Project Management Board.

The Central Project Management Board is established according to the Decision of the Ministry of Planning and Investment and has powers and responsibilities defined in the establishment decision.

The Provincial Project Management Board is established according to the Decision of the People's Committee of the province and has responsibilities and powers defined in the establishment decisions.. 

The District Project Management Board is established according to the Decision of the People's Committee of the districts within the project based on guidance from the Ministry of Planning and Investment and the People's Committees of the project districts, having powers and responsibilities defined in the establishment decisions.The Project Service Provider is the Agricultural and Rural Development Bank according to Decision No. 179/QĐ-NHNN dated March 12, 2002, of the State Bank of Vietnam.  The Development Budget is a component of the Project "Reducing Poverty in Northern Mountainous Provinces," with capital equal to 15% of the total loan amount of the Project. All communes within the Project "Reducing Poverty in Northern Mountainous Provinces" are invested through the Development Budget component. The Development Budget invests in sub-projects including construction, procurementThe Project Service Provider is the Agricultural and Rural Development Bank according to Decision No. 179/QĐ-NHNN dated March 12, 2002, of the State Bank of Vietnam.  at the provincial level.

of goods

at small scale, scattered, and dispersed in villages; proposed by the people Daimed at improving organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.material infrastructure

at small scale, scattered, and dispersed in villages; proposed by the people For coal-fired thermal power plants where the enterprise holds 100% of the registered capital and uses 100% of its own capital to invest in the project approved by the competent authority, E is determined as 100%;aimed at improving hwith urgent nature, improving social life, production for "5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:poor households Xin villages and not included in the investment catalogues of the three main components of the Project "Reducing Poverty in Northern Mountainous Provinces" and other projects. Items funded from

Banks pthe Development Budget

New and restored small-scale infrastructure in villages (footpaths, bridges, irrigation, drinking water, classroom repairs) Improving production conditions (hand tools, advisory services, agricultural - forestry - fisheries extension) Improving health and education conditions for village communities. Enhancing social welfare, increasing income for poor households in villages. The Development Budget is funded entirely by the loan offrom the International Development Association. The People's Committee of the commune the through the Commune Development Board  is responsible for managing effectively and in accordance with the purpose allocated to their commune including:

The Commune Development Board is responsible for managing the account opened at the branch of the Agricultural and Rural Development Bank

for the commune's activities

within the Development Budget component

of the commune

2. Management principles:

themselves The commune is responsible for managing the finances and controlling expenditures for the Development Budget component.

Allocation of Development Budget to communes is carried out according to the principle of 15% of the total loan amount from the International Development Association for the project investment in that commune. All villages within the project commune are invested using the source (not averaged). The basis for allocating funds to villages is financial capital allocated to their commune  (i) all villages in the project commune with needs are allocated investment funds; (ii) prioritizing.

the poorest villages; (iii) paying attention (not averaged). The basis more hto remote and isolated villages within the commune. All communes within the project will implement the Development Budget component starting from the second year of the Project. The Development Budget component

State Treasury hwill be implemented initially in those  evaluated as

having sufficient capacity to communes is carried out according to the principle of 15% of the total loan amount from the International Development Association for the project investment in that commune. meeting the following basic criteria

: (i) The commune has been delegated by the district to implement programs under Program 135 or similar works from other sources; (ii) The commune budget accountant has a secondary or primary level qualification allocated to their commune with at least three years of continuous work experience; (iii) The Commune Development Board has been trained in the financial management of the Project "Reducing Poverty in Northern Mountainous Provinces." Communes that have not yet implemented the Development Budget component  will reserve the funds for use in subsequent years. the 1. Preparation for investment in the Development Budget component. a. Preparing plans for investment in sub-projects at village level and submitting them to the Project Management Board remote villages and hamlets within the commune.

All communes under the project will implement the Development Budget component. Development Budget of the commune, starting from N |||the second year of the Project. The Development Budget component of the commune  will initially be implemented in those to communes is carried out according to the principle of 15% of the total loan amount from the International Development Association for the project investment in that commune. that are assessed to be capable based on the following basic criteria:(i) The commune has been assigned by the district to implement programs under Program 135 or similar projects from other available funds; (ii) The commune's budget accountant holds at least a secondary or primary level qualification with at least three consecutive years of work experience; (iii) The Commune Development Board has received training on financial management of the Northern Mountain Poverty Reduction Project. Communes not implementing the Development Budget component will retain their allocated capital for use in subsequent years., signing and implementing Agreements1. Preparation for investment in the commune development budget. a. Draft plans for small-scale projects in villages and hamlets and submit them to the Commune Development Board

II. SPECIFIC PROVISIONS

for small-scale project proposals, to be submitted to

the Commune Development Board (not averaged). The basis to communes is carried out according to the principle of 15% of the total loan amount from the International Development Association for the project investment in that commune.

Each village organizes a meeting with all components of the community, paying special attention to women, the poor, and vulnerable groups for the people to propose and select small projects to be implemented from the village's Development Budget for that year, divided into the first six months and the last six months. to communes is carried out according to the principle of 15% of the total loan amount from the International Development Association for the project investment in that commune. These small projects must be agreed upon by the village regarding both content and priority list. The Village Head prepares the proposal for small projects and submits it to

the Village Development Board with five main contents with five main contents  focusing on the functions of the District leading organization to conduct reviews. (not averaged). The basis The commune issues a decision to approve the design and estimate. The Chairman of the Commune People's Committee is responsible for the content of the approval decision before the District People's Committee. Competitive bidding:

Estimated number of beneficiaries;

Projected investment cost for the small project;

Clearly state the name(s) of the person(s) in the village who will be responsible for supervising the implementation of the small project (individual or group);

Implementation method (community group with technical skills or household group...);

The form of contribution from the village (labor, materials, or cash contribution) and its estimated value;

b. Approval of small projects at the commune level

Based on the report from the village, the Commune Development Board summarizes the qualified small projects, submits them to the Commune People's Council for approval, and the Chairman of the Commune People's Committee approves them. Subsequently, a report titled "Summary of Small Project Proposals for the Commune" including the administrative management cost budget (divided into investment cycle six months/ time) and sent to the District Project Management Board.

c. Approval procedures at the district level.

The District Project Management Board compiles small projects meeting the criteria of the component allocated to their commune into the plan use loan from the International Development Association, submitted to the Chairman of the District People's Committee to issue a decision approving the content investment plan for the commune development budget for the year (divided to perform work from the date of receiving the file. 2 into investment cycle/year). Decision-making time price framework for power generation not exceeding 15 days from the date the District Project Management Board receives the commune's proposal. The District Project Management Board is responsible for notifying  the list the of approved small projects each year to the communes involved and guiding the communes to implement every six months. If there are small projects that are not approved, the reasons must be clearly stated.

Upon receiving the Decision of the District People's Committee, the Commune People's Committee and the Commune Development Board shall notify in writing the relevant village leaders about the approval of the small projects (not averaged). The basis and the reasons for the non-approval of the small projects (if any) The Decision of the District People's Committee and the plans to implement the small projects in the year must be publicly displayed at the Commune People's Committee Office and the village so that all villagers can fully understand the information.

2. Procedures for Implementing Investment Projects in Villages

a. Survey, Design, and Preparation of Budget Estimate:

For small projects requiring specific design (such as building water channels, pedestrian bridges, toilets...), simple designs should be referenced from existing constructions

in the area or from sample designs. Simple construction methods should be utilized so that the village can carry out the work itself and local materials should be fully exploited. For very simple small projects, the District Project Management Board assigns technical staff to guide the Commune Development Board to prepare drawings for construction (if the (not averaged). The basis Commune (not averaged). The basis Development Board has sufficient capacity).

The budget estimate is prepared to calculate all expenses based on local prices, including contributions from the community and costs paid 100% from the International Development Association loan.

b. Procedures for Reviewing and Approving Drawings and Budget Estimates:

(i). Reviewing Procedures:

For small projects involving construction, both drawings and budget estimates must be reviewed. For small projects that do not require construction drawings, only the budget estimate needs to be approved. Relevant departments of the district organize the review.3. Disbursement procedures and payment

(ii). Approval Procedures:

Based on the minutes of the review by the relevant departments, after adjusting and revising the drawings and budget estimates (if necessary), the Commune People's Committee issues a decision to approve the drawings and budget estimates. The Chairman of the Commune People's Committee is responsible for the content of the approval decision before the District People's Committee.  a. Open Accounts

c. Procurement Procedures:

The value of procurement contracts is very small, typically ranging from 3 to 15 million VND. Procurement activities within the Component will be managed and carried out by the (not averaged). The basis to communes is carried out according to the principle of 15% of the total loan amount from the International Development Association for the project investment in that commune.. District Project Management Board which is responsible for providing detailed guidance to the Commune Development Boards on how to conduct procurement.

After the Chairman of the Commune People's Committee approves the budget estimate, the Commune (not averaged). The basis Development Board acts as the "Project Owner" and is fully responsible for procurement and payment. Procurement methods include:

a. Competitive biddingActual Administrative Expenses;

b. Direct procurement and selection from a single source;

c. Community self-execution;

The Central Project Management Board is responsible for guiding detailed procurement procedures for the Commune Development Budget Component in the Project Implementation Guidebook approved by the Ministry of Planning and Investment in Circular No. 1318/BKH-NN dated March 5, 2002.

d. Signing Contracts, Construction, and Supervision of Construction:

The Commune Development Board, based on the plan already approved by the district and the decisionsapproving the drawings and budget estimates of the Commune People's Committee organizes the signing of contracts.  FOR The small project is implemented under the direct supervision of the Supervisor (individual/group) proposed by the villages during the planning process. Additionally, the execution of the small project is subject to supervision by the local community.

e. Acceptance, Handover, Operation, and Maintenance of Small Projects

(i). Acceptance and Handover

After the completion of construction of the small project, an acceptance and handover ceremony is organized.

Participants: The Commune Development Board (leading), village leadership, Supervisor (individual/group), beneficiary

and representative of the construction contractor (for small projects "with construction").  The small project is officially handed over "triple party" (Project Owner - Contractor - Beneficiary Representative) right at the acceptance ceremony. The acceptance

handover-The Standing Office of the Council for International Cooperation on Non-Governmental Organizations (Vietnam Friendship Association) is the agency responsible for receiving registration dossiers, leading, and coordinating with member agencies of the Council to examine dossiers and return results of reviews of registration dossiers of foreign non-governmental organizations in Vietnam.tominutes amended and supplemented by Law No. 87/2025/QH15; signed by all parties with the presence of witnesses.

(ii). Management, Operation, and Maintenance of the Project

The Beneficiary Representative who takes over the small project is responsible for:

Management, operation, maintenance.

Establishing rules for use and operation specifically for each type of project (irrigation, drinking water, sanitation facilities...).

Regulations on annual contributions in terms of labor, materials, or cash.

Compensation for damages caused to communal property. of Managing income and expenditures for those managing the project.

3. Disbursement and Payment Proceduresa. Opening an Account

6% x (The actual value of each

. Inspection

Each Office will retain their allocated capital for use in subsequent years. shall open one deposit account in Vietnamese Dong at the Branch Banks of Agriculture and Rural Development in the district to receive and disburse the portion of funds sponsored by the International Development Association. The Commune Development Board is the account holder.

b. Controlling agency and procedures for controlling expenditures applied

For sub-projects under the Commune Budget Development Component the State Treasury of the district shall be responsible for directly controlling expenditures including: Investment costs and administrative management costs. The controlling procedure applied is pre-control. After the State Treasury of the district has reviewed and confirmed, the Commune Development Board may proceed with cash withdrawal procedures or transfer funds from the deposit account at the Branch of Agricultural Bank and Rural Development in the district.

c. Procedures for disbursing funds to the Commune Budget Development Component

(i) Advance funding for communes

The Project Management Board of the district bases on the annual budget plan for commune development (every six months) of each commune  reported by the Chairman of the People's Committee of the district has to the Provincial Project Management Board for capital allocation for the investment cycle. The file includes: A comprehensive implementation plan for the component price framework for power generationof the entire district and copies of decisions by the People's Committee of the district approving the implementation plan for the Commune Budget Development Component allocated to their commune of each project commune.  The Provincial Project Management Board, based on the advance request file of the District Project Management Board, transfers the amount of the Commune Budget Development Component

into a special second-level account of the district at the bank serving the district. District Project Management For the first time, the

provincial board will advance funds to the commune account equal to 100% of the total investment amount of approved sub-projects according to the six-month plan along with administrative and management costs as stipulated. Subsequent advances will be based on the next six-month plan and offset the balance on the previous advance account. District Project Management Based on the detailed implementation plan of the Commune Budget Development Component

for each commune in the district that has been approved by the district, the District Project Management Board transfers the full amount of each commune into the commune's account opened at the Branch of Agricultural Bank and Rural Development in the district. Details of the fund transfer process for commune development budgets will be specifically guided in the Project Implementation Handbook (ii) Withdrawal procedures for expenditure by the commune development board.

(1) Advance procedures for investment funds and administrative and management costs

For sub-projects constructing public infrastructure, after signing contracts with the contractor (community

or group of people) and for other sub-projects (equipment procurement, training, production improvement, natural resources...), after the budget has been approved by the People's Committee of the commune, advance payments should be made to the contractor according to the progress specified in the signed contract or advance payments should be made for procurement and payment for activities of the sub-projects, the advance payment procedures are as follows: a. Advance payment to contractors for sub-projects constructing public infrastructure: The contractor is entitled to an advance payment of 50% of the contract value immediately after signing the contract.

b. For other sub-projects (equipment procurement, training, production improvement, natural resources...), the Board

shall make advance payments strictly according to the payment schedule stated in the signed contract. Specifically, for sub-projects without contracts, such as purchasing small goods and equipment, advance payments must be made based on the supplier's payment requirements, not exceeding the payment needs. will retain their allocated capital for use in subsequent years. c. Advance payment for administrative and management costs: Up to a maximum of 70% of the approved value according to the plan can be advanced.

The documents required for advance payment include:

Construction, procurement, service contracts for sub-projects with signed contracts.

Procurement contracts under the "bid" method must also include a Record of Evaluation of Bids signed and approved by the People's Committee of the commune.

Decision approving the six-month plan of the Commune Budget Development Component of the People's Committee of the district.

Detailed budget for implementing sub-projects accompanied by the Decision approving the drawings and estimates of the People's Committee of the commune.

Administrative and management cost budget already approved by the People's Committee of the commune.

Request for advance payment.

These documents are submitted to the State Treasury of the district. Within five days, the State Treasury of the district will review and confirm the advance payment. The confirmation of

the district serves as the basis for the Board State Treasury to write a check to withdraw cash from its account at the Branch of Agricultural Bank and Rural Development in the district. If will retain their allocated capital for use in subsequent years. the contractor has an account at the bank, the advance payment can be transferred to them via direct transfer. party (2) Payment for completed work volume:

The procedure for paying for completed investment volume is similar to the advance payment procedure. When there is completed investment volume (construction, procurement, services), the Board

processes the payment for the completed investment volume with the State Treasury will retain their allocated capital for use in subsequent years. of the district. The payment file includes the following documents submitted to the State Treasury of the district for pre-check before payment. Payment statement.

Acceptance record signed and confirmed by all relevant parties.

Supporting documents such as: Community labor payment list with signatures of the recipients

; Bid evaluation records signed and approved(if procurement is through the "bid" method) has been organizes the signing of contracts. Payment request. The total payment for each sub-project cannot exceed

the plan approved by the People's Committee of the district. Each sub-project only has one advance payment and one payment upon completion.

These documents are submitted to the State Treasury of the district. Within five days, the State Treasury of the district will confirm the completed volume. Based on this confirmation of the State Treasury,

the Commune Development Board processes the transfer of funds to the contractor at the Branch of Agricultural Bank and Rural Development in the district. (3) Payment for Administrative and Management Costs Banks The Administrative and Management Costs are settled based on the actual value of implementing sub-projects within the six-month plan. After completing all sub-projects according to the six-month plan and having the actual value of these sub-projects, the Board

recalculates the actual value of the Administrative and Management Costs enjoyed according to the formula:

Actual Administrative and will retain their allocated capital for use in subsequent years. Management Costs

Administrative and management costs include village assembly organization fees, construction project supervision fees, basic construction, allowances for commune management board members, (not averaged). The basis office supplies, and the other office expenses.. The standard for administrative and management costs will be applied according to specific regulations of each locality implementing the project.

Payment files are submitted to State Treasury the district for expenditure control procedures including the following documents:

A detailed payment schedule listing all requested payments.

An application form  for advance payment/ settlement of administrative and management costs.

Within five days, the State Treasury of the district checks and confirms that the conditions for payment are met, the Management Board will retain their allocated capital for use in subsequent years. writes checks and withdraws cash from the Agricultural Development Branch of the Rural Credit Bank and in the district.

4. Accounting work at the Commune Development Board

The commune accountant may use a simple accounting system with ledgers, forms, and accounting processes guided in the Handbook on Implementing the Project compiled by the Central Project Management Board.

All relevant vouchers, invoices, receipts, contracts... related to investment costs and administrative and management costs within the scope of the Commune Development Budget component must be kept at the Commune Development Board for inspection, verification or audit when necessary.

Other issues related to accounting work shall be carried out in accordance with current regulations.

5Reporting on the implementation of sub-projects, implementation of Component

a. Village reports:

Quarterly , villages implementing sub-projects report to the Commune Development Board on the progress of their sub-projects, including completion reports. Supervisorsappointed by the villages are responsible for preparing quarterly progress reports on sub-projects. HAPPY Village leaders review the quarterly progress reports on sub-projects, sign them and submit them to the Commune Development Board.

b. Reports of the Commune Development Board:

At the end of each quarter, the Commune Development Board prepares a quarterly progress report on the implementation of all sub-projects in the commune. These reports are compiled from village reports submitted and will be transferred to the District Project Management Board.

At the end of each investment cycle, the Commune Development Board prepares final investment cycle reports sent to the District Project Management Board. The content of the final investment cycle report

specifically describes the activities of the component implemented during the cycle, compares the results achieved with approved plans and presents issues  still unresolved needing resolution. In addition to the final cycle report on the activities of the component implemented during the investment cycle, at the end of each cycle, the

commune prepares a final investment cycle financial report sent to the District Financeu report. The methods for collecting data and establishing indices in the report must be implemented to ensure consistency with accounting work. and Planning Office. (not averaged). The basis Settlement Report Preparation and Approval Based on Circular Joint 666/2001/TTLT/BKH-UBDTMN-TC-XD dated August 23, 2001 issued by the Ministry of Planning and Investment ? National Ethnic Minorities Commission ? Ministry of Finance ? Ministry of Construction guiding the management of investment and construction of infrastructure projects under Program 135, the District Project Management Board guides the preparation of individual sub-project settlement reports. The format of the settlement report is directed in the Implementation Guidebook

6.

The settlement report is reviewed by the District Finance and Planning Office and submitted The Commune Development Board to the Chairman of the People's Committee of the district for approval by Decision. The time for reviewing a sub-project settlement report does not exceed fifteen working days.Internal Audit The District Finance and Planning Office conducts internal audits of the Commune Development Budget component every six months. Procedures for conducting internal audits are specified

7in detail in

Project Audit:  The Commune Development Budget component  is audited together when auditing (ii) Withdrawal procedures for expenditure by the commune development board.

8the District Project Management Board. The Commune Development Board is responsible for providing complete documentation to the auditing agency for the audit.

Inspection Regularly and unexpectedly, the District, Provincial, and Central Project Management Boards, the Ministry of Planning and Investment and the Ministry of Finance will inspect the implementation of the project and the use of funds for the Commune Development Budget component. If misuse of funds is discovered, competent authorities will suspend fund transfers and handle violations according to current regulations. This Circular takes effect fifteen days after its publication in the Official Gazette. During implementation, if there are difficulties, agencies should promptly reflect them to the Ministry of Finance for study and amendment.

9This Circular takes effect fifteen days after its publication in the Official Gazette. During implementation, if there are difficulties, agencies should promptly reflect them to the Ministry of Finance for study and amendment.

Periodically and on an ad hoc basis, the Project Management Board at the district, provincial, and central levels, the Ministry of Planning and Investment, and the Ministry of Finance shall inspect the implementation of the project and the use of the Development Social Budget component funds. If any misuse of funds is discovered, the competent authorities will suspend fund transfers and handle violations according to current regulations.  This Circular shall take effect fifteen days from the date of publication in the Official Gazette. During its implementation, if any difficulties arise, the relevant agencies must promptly report them to the Ministry of Finance for study and appropriate amendments.

III. IMPLEMENTATION PROVISIONS

Thông tư này có hiệu lực sau 15 ngày kể từ ngày đăng Công báo. Trong quá trình thực hiện, nếu có vướng mắc, các cơ quan cần phản ánh kịp thời để Bộ Tài chính nghiên cứu sửa đổi, bổ sung.