| THE MINISTRY OF FINANCE ------- | SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness ---------- |
| No: 80/2006/TT-BTC | Hanoi, August 30, 2006 |
CIRCULAR
GUIDING THE FINANCIAL MANAGEMENT MECHANISM APPLICABLE TO THE FORESTRY SECTOR DEVELOPMENT PROJECT
Pursuant to Development Credit Agreement No. 3953-VN signed on April 4, 2005, between the Vietnamese Government and the International Development Association (IDA) on the forestry sector development project;
Pursuant to Agreement No. TF 053397 signed on April 4, 2005, between the Vietnamese Government and IDA on the amount co-financed by the Global Environmental Facility (GEF) and entrusted to IDA for executing the forestry sector development project;
Pursuant to Agreements No. TF 054523 and No. TF 054524 signed on April 4, 2005, between the Vietnamese Government and IDA, on the co-financing (through the Multi-Donor Trust Fund – MTDF) by the Dutch Government and the Finnish Government trusted through IDA for the execution of the forestry sector development project;
Pursuant to the Government's Decree No. 77/2003/ND-CP of July 1, 2003, defining the functions, tasks and organizational apparatus of the Ministry of Finance;
Pursuant to the Government's Decree No. 17/2001/ND-CP of May 4, 2001, promulgating the Regulation on management and use of official development assistance;
Pursuant to the Prime Minister's Decision No. 332/QD-TTg of April 6, 2004, approving the prefeasibility study report of the forestry sector development project;
Pursuant to Decision No. 1067/QD-BNN-LN of April 27, 2004, of the Minister of Agriculture and Rural Development approving the feasibility study report of the forestry sector development project;
After consulting the Ministry of Agriculture and Rural Development, the Ministry of Finance hereby guides the financial management mechanism applicable to the forestry sector development project as follows:
Section I: GENERAL PROVISIONS
1. Scope of application: This Circular provides guidance on matters of state financial management of the forestry sector development project, specifically the opening of accounts, making of financial plans, administrative expense norms, capital withdrawal procedures, supervision, reporting, audit and tax policy applicable to the project and the management of assets formed from the project, and responsibilities of related agencies in the financial state management of the project.
2. Interpretation of terms: In this Circular, the following terms shall be construed as follows:
a/ Project shall refer to the forestry sector development project approved under the Prime Minister's Decision No. 332/QD-TTg of April 6, 2004, approving the prefeasibility study report of the forestry sector development project.
b/ Project management agency shall refer to the Ministry of Agriculture and Rural Development as designated in the Prime Minister's Decision No. 332/QD-TTg.
c/ Project owners shall refer to the Ministry of Agriculture and Rural Development, the People's Committees of Thua Thien Hue, Binh Dinh, Quang Nam and Quang Ngai provinces , and the Social Policy Bank. To execute relevant project components, the project owners shall set up project management units in accordance with the provisions of Points h to m of this Clause.
d/ Non-credit components shall refer to the project's components which shall be directly executed by the Ministry of Agriculture and Rural Development and the People's Committees of the four provinces to provide services in support of the planting of production forests under the project.
e/ Credit component shall refer to part of the project's component 2 which shall be executed by the Social Policy Bank to grant credit to organizations and individuals that wish to borrow loans for developing production forests in the project-covered regions, as stipulated in the Prime Minister's Decision No. 332/QD-TTg.
f/ Central project coordination committee shall refer to the unit set up by the Ministry of Agriculture and Rural Development to uniformly coordinate activities of the project, directly manage non-credit components, and have functions, tasks and powers defined in its establishment decision.
g/ The Vietnam Conservation Fund management unit shall refer to the unit set up by the Ministry of Agriculture and Rural Development to manage the Conservation Fund component project, and have the functions, tasks and powers defined in its establishment decision.
h/ Credit component project management unit shall refer to the unit set up by the Social Policy Bank to manage the credit component of the project, and have the functions, tasks and powers defined in its establishment decision.
i/ Provincial project management units (of four provinces) shall be set up by the People's Committees of the project-covered provinces, and have the functions, tasks and powers defined in their respective establishment decisions.
j/ District project execution units and commune task forces shall refer to project execution units set up under decisions of the district or commune People's Committees, and have the functions, tasks and powers defined in their respective establishment decisions.
k/ Expenditure control bodies shall refer to the system of state treasuries, for non-credit components, the Ministry of Finance (the External Finance Department), for the credit component.
l/ Domestic contributed capital shall refer to the source of capital contributed by the Vietnamese Government and included in annual state budget expenditure estimates of the Ministry of Agriculture and Rural Development and the project-covered provinces according to the current state budget decentralization, and the portion of capital contributed by the Social Policy Bank to the project.
m/ Re-borrowing bank shall refer to the Social Policy Bank.
n/ Service bank shall refer to the Bank for Agriculture and Rural Development of Vietnam.
o/ Special account(s) shall refer to US dollar account(s) opened by the central project coordination committee, the Conservation Fund management unit and credit component project management units at the service bank to receive capital advanced from the loan and donation capital sources for the project.
p/ Project management units entitled to withdraw foreign capital shall refer to the central project coordination committee, the Conservation Fund management unit and the credit component project management unit which are authorized to conduct transactions of withdrawing loan and aid capital from foreign countries and have introduced their specimen signatures to the Ministry of Finance (the External Finance Department).
2. Management principles:
a/ The project's financing sources of loan and aid capital shall constitute a source of the state budget and be managed in accordance with regulations on management of state budget capital and donors' regulations.
b/ The system of state treasuries which allocate grants to the project shall be responsible for controlling expenditure, checking and certifying the value of capital eligible for payment/advance so that the project execution units can withdraw foreign capital, and at the same time directly allocating domestic contributed capital to the project (excluding the credit components executed by the re-borrowing bank).
c/ The project shall receive fundings from two sources: domestic capital and foreign capital. Domestic capital shall be allocated according to current state regulations. Foreign capital shall be allocated/re-lent to beneficiary units according to the provisions of this Circular and regulations of Vietnam and donors.
d/ The Ministry of Agriculture and Rural Development, the project-covered provinces and the re-borrowing bank shall be responsible for using capital for proper purposes and the approved project contents and in conformity with the conditions committed in the agreements, and relevant documents enclosed thereto.
e/ The Ministry of Agriculture and Rural Development, the project-covered provinces and the re-borrowing bank shall be responsible for managing and supervising assets of the project and their attached project management units according to current state regulations.
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