Circular No. 94/2009/TT-BTC guiding the disbursement and recovery of loans under the Credit Agreement signed on February 5, 2009 between the Government of the Socialist Republic of Vietnam and the Government of the Lao People's Democratic Republic.

CIRCULAR

Guidelines for disbursement and recovery of loans under the Credit Agreement signed on February 5, 2009, between the Government of the Socialist Republic of Vietnam and the Government of the Lao People's Democratic Republic.

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Pursuant to the Credit Agreement between the Government of the Socialist Republic of Vietnam (Vietnamese Government) and the Government of the Lao People's Democratic Republic (Lao Government) No. VL-03 dated February 5, 2009, regarding the Vietnamese Government’s provision of a concessional loan not exceeding forty-three million US dollars (the Loan) to the Lao Government.

Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

The Ministry of Finance guides the implementation of disbursement, debt recovery, and settlement of the Loan as follows:

I. GENERAL PROVISIONS

1. Purpose and Scope of Use of the Loan:

The Loan shall be provided to finance the costs listed in Appendix 1 of the Credit Agreement for the upgrading of Road 2E (Mường Khoa – Tây Trang section), including:

- Technical design costs (included in the total budget estimate), detailed design, construction supervision... carried out by consultants.

- Construction and upgrade costs of Road 2E (Mường Khoa – Tây Trang section).

- Other costs (if any) must be approved by the Ministry of Finance of Vietnam and the Ministry of Finance of Laos.

2. Explanation of Terms:

In this Circular, the following terms are understood as follows:

"Credit Agreement" means the agreement signed between the Vietnamese Government and the Lao Government No. VL-03 dated February 5, 2009, providing a concessional loan not exceeding forty-three million US dollars for the construction and upgrading of Road 2E.

"Road 2E" refers to the road located within the territory of Laos (Mường Khoa – Tây Trang section) adjacent to the border with Vietnam.

"Lender" is the Government of the Socialist Republic of Vietnam represented by the Ministry of Finance of Vietnam.

"Borrower" is the Government of the Lao People's Democratic Republic represented by the Ministry of Finance of Laos.

"Vietnam Development Bank" is the entity authorized by the Lender to mobilize funds, make payments, and directly recover the loan from the Borrower.

"Project Owner" is the entity authorized by the Government of the Lao People's Democratic Republic to implement the project.

"Contractor" refers to Vietnamese economic units and joint ventures between Vietnam and Laos that sign economic construction contracts, supply goods, and provide services to the Project Owner to implement the Road 2E Upgrading Project in Laos.

"Economic Contract" is the contract signed between the Project Owner and the Contractor in accordance with the conditions set forth in Article 3 of the Credit Agreement.

"Agency Bank" is the bank selected by the Vietnam Development Bank to authorize the payment of loan funds to entities implementing the project.

II. SPECIFIC PROVISIONS

1. Legal Documents for Implementing the Agreement:

To implement the Agreement, the following documents must be sent by the Ministry of Finance of Vietnam to the Vietnam Development Bank:

1.1 A document from the Ministry of Finance of Vietnam authorizing the Vietnam Development Bank to mobilize funds, make payments, and recover debts according to the content of the Credit Agreement.

1.2 Any relevant documents related to disbursement from the Lao side (if any) sent by the Ministry of Finance of Laos to the Ministry of Finance of Vietnam.

1.3 A sample signature registration form of the person authorized by the Minister of Finance of Laos to sign Payment Requests under the Credit Agreement (according to the model in the Credit Agreement) sent by the Ministry of Finance of Laos to the Ministry of Finance of Vietnam.

2. Approval of Economic Contracts:

All Economic Contracts must be submitted to the Ministry of Finance of Laos for contract approval procedures; the Contract and the Ministry of Finance of Laos's approval of the Contract will be sent to the Ministry of Finance of Vietnam for review. If they comply with the provisions of the Credit Agreement, the Ministry of Finance of Vietnam will notify confirmation of the Contract to the Ministry of Finance of Laos and issue a letter of approval to the Vietnam Development Bank.

3. Provisions on Payment:

3.1 Opening and Using the Loan Account:

a/ The Vietnam Development Bank shall open an account named "Loan for Road 2E of the Lao People's Democratic Republic Government" (referred to as Account VL-03) for the Lender to record and monitor the disbursement and debt recovery process for this loan.

b/ Account VL-03 shall be recorded in US dollars. In cases where the actual transaction currency is Vietnamese Dong or Lao Kip, the conversion rate to US dollars shall be based on the selling rate of Vietnamese Dong or Lao Kip at the time of transaction as announced by the Agency Bank. The Vietnam Development Bank shall be responsible for notifying both the Lender and the Borrower of the name of the Agency Bank before the first disbursement.

c/ The date when the Vietnam Development Bank records the loan account and starts charging interest to the Lao People's Democratic Republic Government is the date when the Vietnam Development Bank makes payment to the Contractor.

3.2 Currency for Payment:

a/ The currency stated on the Payment Request may be Vietnamese Dong, Lao Kip, or US dollars. The amount paid to the Lao side shall be recorded in US dollars according to the exchange rate specified in point b, Section 3.1 above.

b/ Based on the Borrower's request and the requirement to purchase goods and services, and in accordance with the value of payment stipulated in the Economic Contract signed between the Project Owner and the Contractor and approved by the Ministry of Finance of Vietnam and the Ministry of Finance of Laos, the Vietnam Development Bank will consider and make payments in Vietnamese Dong, Lao Kip, or US dollars for legitimate project expenses.

3.3 Total Value and Payment Deadline:

The total payment amount under the Credit Agreement shall not exceed forty-three million US dollars. The final payment date for the Borrower is February 5, 2014, unless otherwise agreed between the Borrower and the Lender.

3.4 Payment Procedures:

a/ For the entire Agreement, for the Borrower to be eligible for payment, the Ministry of Finance of Laos must send the following documents to the Ministry of Finance of Vietnam:

- A sample signature registration form of the person authorized to sign Payment Requests on behalf of the Borrower, sent by the Ministry of Finance of Laos to the Ministry of Finance of Vietnam.

- In cases where a bank or agency of the Borrower is authorized to handle disbursements, the Ministry of Finance of Laos will send an official authorization document to the Ministry of Finance of Vietnam.

b/ For each Economic Contract, the Ministry of Finance of Vietnam will send the following documents to the Vietnam Development Bank:

- A copy of the Economic Contract provided by the Ministry of Finance of Laos.

- A copy of the Letter of Approval of the Contract issued by the Ministry of Finance of Laos specifying the value of the loan to be used under the Contract.

- The original copy of the notification confirming the Contract and the approval letter from the Ministry of Finance of Vietnam.

c/ For each payment, the Borrower shall submit to the Vietnam Development Bank the following documents:

- A Request for Payment in English, signed by an authorized representative of the Borrower who has registered their signature with the Lender (in accordance with the model specified in Credit Agreement VL-03).

- A Claim for Payment in English prepared by the Contractor and sent to the Project Owner (in accordance with the model specified in Credit Agreement VL-03), which has been confirmed by the Project Owner as agreeing to the payment.

- Various invoices or other necessary documents to prove the validity of the payment:

* For payment of goods and equipment:

+ Commercial invoice for the supplied goods;

+ Set of shipping documents including: invoice, transport documents, cargo insurance certificate, certificate of origin, packing list, pre-delivery inspection certificate.

+ Delivery and receipt record for goods and equipment, warehouse entry slip.

+ Other documents as required by the Economic Contract (if applicable).

* For payment of services:

+ Invoice or payment request from the Consultant;

+ Confirmation of the progress of the Consulting Contract by the Project Owner;

+ Other documents as required by the Economic Contract (if applicable).

* For construction payment:

+ Payment request form of the Contractor according to the model in the Credit Agreement.

+ Completion volume acceptance record signed off by the Supervising Consultant and the Project Owner.

+ Other documents as required by the Economic Contract (if applicable).

* For advance payment:

+ Advance payment request form of the Contractor according to the Contract;

+ Advance payment guarantee letter issued by the Contractor's bank.

3.5 Payment Process and Debt Notification:

a/ Payment to Beneficiaries:

- After receiving complete and valid disbursement documents, within a maximum of five working days, the Vietnam Development Bank will review and directly make payments to the Beneficiary as requested by the Borrower. In case the Vietnam Development Bank does not approve part or all of the payment request, it must inform the Borrower clearly and report to the Ministry of Finance of Vietnam for resolution.

b/ Disbursement Result Notification and Repayment Schedule:

- After each payment, the Vietnam Development Bank is responsible for immediately sending a notification letter to the Borrower and the Ministry of Finance detailing: Beneficiary; amount; exchange rate; payment date; payment content; cumulative capital disbursed.

- Quarterly, the Vietnam Development Bank sends a copy of the account statement for the "VL-03 Credit" account (Account Statement) to the Ministry of Finance of Vietnam.

- Upon expiration of the repayment period or when the full agreed capital has been disbursed under the Agreement (as stated in point 3.3 above) without further disbursement notifications from the Borrower and the Lender, the Vietnam Development Bank will prepare a consolidated repayment schedule corresponding to the total disbursed capital and notify the Borrower and the Ministry of Finance of Vietnam.

4. Principal and Interest Repayment:

4.1 Principal:

- The Borrower shall repay the principal over a period of ten years in twenty semi-annual installments on March 10th and September 10th each year, starting from March 10, 2014, as recorded in Appendix III of the Repayment Schedule.

4.2 Interest:

- The Borrower shall repay interest every six months on March 10th and September 10th each year, beginning from September 10, 2009. If the interest payment date falls on a public holiday or weekend, the payment will be made on the first working day thereafter.

- The loan interest rate is 1.5% per annum on the actual outstanding balance (recorded in USD) during the interest calculation period. Overdue interest rate is 3% per annum (interest and overdue interest are calculated based on a year of 360 days).

4.3 Repayment Procedure:

When receiving a repayment, the Vietnam Development Bank shall deduct the debt in the following priority order:

- Overdue fees, penalties on principal and overdue interest;

- Overdue interest;

- Overdue principal;

- Due interest;

- Due principal.

5. Debt Recovery Method:

5.1 Debt Recovery:

- Thirty days before each repayment due date, the Vietnam Development Bank shall notify the Borrower and the Ministry of Finance of Vietnam about the principal and interest amounts due for that period.

- The Vietnam Development Bank will proceed with debt recovery procedures in accordance with the provisions of the Credit Agreement and this Circular, while preparing a notice of reduction in the loan balance to be sent to the Borrower and notifying the Ministry of Finance of Vietnam for monitoring purposes.

5.2 Overdue Debt:

- If the Vietnam Development Bank has not received the repayment amount by the due date, the amount will be transferred to the Borrower's overdue account and the overdue interest rate of 3% per annum will apply from the due date until the Borrower repays the overdue principal and interest in accordance with the Agreement.

- The Vietnam Development Bank will notify the Borrower and the Ministry of Finance of the overdue amount (principal and interest) at the overdue interest rate of 3% per annum as stipulated in the Agreement.

- If the Borrower incurs overdue principal and/or interest as per Article 7 of the Credit Agreement and fails to pay for two consecutive periods, the Vietnam Development Bank will notify the Ministry of Finance to jointly discuss measures to address the issue, and if necessary, report to the Prime Minister for decision.

5.3 Settlement of Loans:

When the Borrower fulfills its repayment obligations under the Agreement, the Vietnam Development Bank will settle and close related accounts, and notify the Borrower and the Ministry of Finance of Vietnam accordingly.

6. Interest Rate Subsidy:

The difference between the deposit interest rate of the Vietnam Development Bank for implementing the Credit Agreement and the loan interest rate specified in the Credit Agreement will be subsidized annually by the Ministry of Finance of Vietnam along with other interest rate subsidies granted by the Government to the Vietnam Development Bank for raising funds and lending under state credit programs.

III. EFFECTIVE DATE OF IMPLEMENTATION

This Circular takes effect 45 days after the signing date and applies from the effective date of Credit Agreement VL-03.

During implementation, if there are any difficulties, please promptly reflect them to the Ministry of Finance for consideration and resolution. /./