Only use ODA capital for essential construction

For accelerated indebtedness, must notify to the Ministry of Finance

ccording to the draft circular, provincial people's committees take responsibility for paying debts in full and on time to the Ministry of Finance in accordance with the provisions of the Decree No. 52 and re-lending agreement.

Based on the repayment term prescribed in the re-lending agreement, the People's Committee at provincial-level / provincial Finance Department shall calculate the principal, interest and fee payable that must be payed and transferred to the Ministry of Finance via the account of the Accumulated fund for debt repayment on the date specified in the re-lending agreement. In casesof debt repayment date is due on daysoff, provincial people's committees shall pay debts on the working day before the holidays.

Based on the interest rate announcement of the donor, the Ministry of Finance shall announce the periodical interest rate to the People's Committee at provincial-level/ provincial Finance Department in case of re-lending interest rate.

Debt repayment is based on re-lending currency. People's Committees at provincial-level shall repay debts in foreign currencies if they have revenues from projects in foreign currencies or deal with domestic commercial banks for the purchase of foreign currencies. In case of debt repayment in VND, it will be implemented under the provisions of Clause 1, Article 6 of Decree No. 52.

If requesting the debt repayment before maturity, the People's Committee at provincial-level shall send a written notice to the Ministry of Finance at least 45 days before the repayment term or before the time limit prescribed in the foreign loan agreement on early repayment to the Ministry of Finance to exchange with donors. Debt repayment will be made only when the Ministry of Finance and the donor agree. People's Committees at provincial-level will pay a fee for early repayment of debts according to the provisions of foreign loan agreements or re-lending agreements.

Do not use ODA for current expenditures

In the draft, the Ministry of Finance proposes seven principles to use the Government's foreign loans for People's Committees at provincial level.

Accordingly, ODA loans and preferential loans of the People's Committees at provincial level will be included in the overall balance of loans of local administrations. The disbursed capital under the form of re-lending will be calculated in the borrowing limit of the local budget according to the provisions of the State Budget Law and must be ensured in the total loan amount, and the deficit of each locality shall be decided annually by the National Assembly.

Programs and projects for using ODA loans and preferential loans of the People's Committees at provincial level must be included in the medium-term public investment plan, total loans of the local budget, including the offset loans and loans for original repayment of the local budget that is in the five-year financial plans and annual budget estimates of the Centrally-affiliated cities and provinces and managed according to the current applicable regulations for state budget capital and public investment capital.

People's Committees at provincial-level will make lists of programs and projects included in their five-year financial plans and medium-term public investment plans and submit them to the People's Councils for consideration and comments for submission to the Government and the National Assembly to decide. When compiling this list, the People's Committees at provincial-level should assign local budget funds for each specific program or project for the local budget spending tasks. For the re-borrowed capital from ODA loans and preferential loans of the Government, the People's Committees at provincial-level will determine the ratio of re-lending and allocation ratios decided by the Minister of Finance in each period.

Based on the five-year financial plan and the medium-term public investment plan of the provinces or centrally-run cities approved by competent authorities, after balancing and allocating adequate funds to the programs and projects under development, new programs and projects on loans for People's Committees at provincial-level will carry out steps of proposing programs or projects and formulating investment policies/ reports on pre-feasibility studies of loan programs and projects from ODA and preferential loans.

ODA capital and preferential loans that People's Committees at provincial-level will re-borrow must be used for development investment into essential works under the spending tasks of local budgets and use them as local contributions in public-private partnership projects. Do not use ODA loans and preferential loans for regular expenditure activities.