Circular No. 64/2006/TT-BTC dated June 30, 2006 of the Ministry of Finance guiding the implementation of the Prime Minister's Decision No. 42/2006/QD-TTg dated February 16, 2006, on a number of preferential budgetary and financial mechanisms for Can Tho city

CIRCULAR

GUIDING THE IMPLEMENTATION OF THE PRIME MINISTER'S DECISION NO. 42/2006/QD-TTG OF FEBRUARY 16, 2006, ON A NUMBER OF PREFERENTIAL BUDGETARY AND FINANCIAL MECHANISMS FOR CAN THO CITY

Pursuant to the Government's Decree No. 60/2003/ND-CP of June 6, 2003, detailing and guiding the implementation of the State Budget Law;

Pursuant to the Government's Decree No. 77/2003/ND-CP of July 1, 2003, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

Pursuant to the Prime Minister's Decision No. 42/2006/QD-TTg of February 16, 2006, on a number of preferential budgetary and financial mechanisms for Can Tho city;

The Ministry of Finance hereby guides the implementation of a number of preferential budgetary and financial mechanisms for Can Tho city as follows:

A. GENERAL PROVISIONS

1. This Circular guides the implementation of regulations on preferential budgetary and financial mechanisms for Can Tho city, including the mechanism for budgetary management and the mechanism for mobilization of financial sources for development investment in Can Tho city.

2. Apart from preferential budgetary and financial mechanisms specified in the Prime Minister's Decision No. 42/2006/QD-TTg of February 16, 2006, and guided in this Circular, the city shall observe general provisions on financial and budgetary management in the State Budget Law, the Government's Decree No. 60/2003/ND-CP of June 6, 2003, the Finance Ministry's Circular No. 59/2003/TT-BTC of June 23, 2003, and other legal documents on finance and budget.

B. SPECIFIC PROVISIONS

I. ON BUDGETARY MECHANISMS

1. On the allocation of investment capital through ministries and central agencies and investment supports from the central budget for key projects in the city.

1.1. In the 2006-2010 period, based on the municipal budget's capital-allocating capacity and the central budget's capital-balancing capacity, annually capital shall be allocated and supports shall be provided from the central budget for the execution of important projects of Can Tho city and the Mekong River delta provinces on the list of projects defined in Item a, Clause 1, Article 1 of the Prime Minister's Decision No. 42/2006/QD-TTg of February 16, 2006.

1.1. Principles for capital allocation and support: For investment projects managed by the city, targeted partial supports shall be provided from the central budget to the municipal budget for execution. For projects located in the city but managed by ministries or central agencies, capital shall be allocated from the central budget through these ministries or central agencies for execution by the following methods:

1.2.1. For investment projects managed by the city: Annually, before July 25, the municipal Finance Service shall coordinate with the Planning and Investment Service and other relevant services in assisting the municipal People's Committee in, on the basis of each project's total investment capital amount already approved by competent authorities and divided for execution on a yearly basis, reporting on the project's execution schedule and capital demand in the planned year, clearly determining the amount to be allocated from the city budget, the amount to be supported from the central budget and other financial sources according regulations, to the Ministry of Finance and the Ministry of Planning and Investment for sum-up and reporting to the Government which shall submit to the National Assembly for decision the level of targeted additional allocation from the central budget to the city budget for each project in the annual budget estimates.

1.2.2. For investment projects located in the city but managed by ministries or central agencies: Annually, on the basis of the projects' total investment amounts already approved by competent authorities and project execution schedules in the planned year, ministries and agencies having relevant projects shall estimate their capital demands and report them to the Ministry of Planning and Investment and the Ministry of Finance before July 25 for sum-up and reporting to the Government for submission to the National Assembly for decision according to the provisions of the State Budget Law.

2. For other important projects such as the project on the city's general hospital, etc., based on the projects' total investment amounts already approved by competent authorities, the project execution schedule in the planned year, the capacity of the city budget and the central budget and at the request of the municipal People's Committee, the Ministry of Finance and the Ministry of Planning and Investment shall sum up and report to the Government targeted supports from the central budget to the city budget for submission to the National Assembly for decision according to the provisions of the State Budget Law.

3. On the allocation of investment capital from the source of government bonds: Based on the plans on issuance of government bonds and the purposes of using the source of government bonds for development investment, the Ministry of Planning and Investment shall coordinate with the Ministry of Finance in including into the list of projects to be invested with the source of government bonds three projects managed by Can Tho city, namely the project on Mau Than-Tra Noc Airport road; the project on Bon Tong-Mot Ngan road; and the project on upgrading and expansion of Cai Cui port, and phasing the investment process in accordance with their execution schedule.

4. On rewards and targeted allocations from revenue amounts collected in excess of the annual central budget estimates in the city

4.1. On rewards for revenues collected in excess of budget estimates: Annually, if there is an increase in the central budget revenue over the assigned estimate from the revenues divided between the central budget and the city budget according to the State Budget Law, the city budget shall be rewarded 30% of this increase, which, however, shall not exceed the amount increased over the previous year's earned revenue. The method of determining the reward level, principles for using reward money and the method of budgetary accounting of the reward money shall comply with the provisions of Section 17, Part IV of the Finance Ministry's Circular No. 59/2003/TT-BTC of June 23, 2003.

4.2. For the revenue amount collected in excess of the annual central budget estimate assigned by the Prime Minister (excluding value added tax on imported goods; revenues which are paid in the city but not managed by or arising in the city; mutual clearing amounts according to the provisions of law, and revenues permitted to be retained at units which shall be spent and managed via the budget according to the provisions of law), based on the state budget's balancing capacity and the city's support demands, the Ministry of Finance shall consult the Ministry of Planning and Investment before reporting to the Government for submission to the National Assembly Standing Committee for comments the prioritized grant of such amount to the city budget according to the provisions of the State Budget Law. Based on the Prime Minister's decision on the provision of targeted allocations from the amount collected in excess of the annual state budget estimate to the city budget, the municipal People's Committee shall invest such targeted allocations for proper purposes.

The annual reward amounts and targeted supports from the central budget to the city budget defined in Points 4.1 and 4.2, Clause 4, Section I, Part B of this Circular shall be used in accordance with the provisions of Point d, Clause 1, Article 1 of the Prime Minister's Decision No. 42/2006/QD-TTg of February 16, 2006, on a number of preferential budgetary and financial mechanisms for Can Tho city.

2. On the 2007 budget estimate

Regarding the budget estimate for 2007 (the first year of the next budget-stabilizing period), the Ministry of Finance and the Ministry of Planning and Investment shall coordinate with the People's Committee of Can Tho city in estimating the city budget on the principles that the estimated development investment expenditure managed by the city, including the estimated development investment expenditure within the expenditure estimates apportioned in the local budget (excluding the source of infrastructure investment capital from the collection of land use levies) and the estimated development investment expenditure from targeted allocations from the central budget to the local budget (excluding foreign investment capital sources) shall be equal to the development investment capital managed by Hai Phong city or Da Nang city; regular expenditure estimate shall be calculated according to set norms and reported to the Government for submission to the National Assembly and National Assembly Standing Committee according to the provisions of the State Budget Law.

II. ON MOBILIZATION OF FINANCIAL SOURCES FOR DEVELOPMENT INVESTMENT

1. Can Tho city shall be allowed to mobilize domestic investment capital by issuing municipal bonds under the provisions of the Government's Decree No. 141/2003/ND-CP of November 20, 2003, and apply other forms of mobilization according to the provisions of law; the city budget shall arrange financial sources for payment of loan principals, interests and other relevant expenses according to regulations.

When wishing to mobilize investment capital, the municipal People's Committee shall make and submit a plan thereon to the municipal People's Council for decision according to the provisions of Point 1.3.4, Clause 1.3, Section 1, Part II of the Finance Ministry's Circular No. 59/2003/TT-BTC of June 23, 2003.

2. Can Tho city may mobilize foreign loans for execution of its important infrastructure projects, which are funded by its budget, on the principle that the municipal People's Committee shall make a plan on capital sources and consult the Ministry of Finance, the Ministry of Planning and Investment and the State Bank of Vietnam before submitting it to the Prime Minister for consideration and decision according to the mechanism under which the Government borrows foreign loans for sublending to the city to execution of projects and works at the request of the municipal People's Committee. The city shall allocate capital from its budget for payment of loan principals, interests and assorted charges under the signed borrowing contracts according to the provisions of law.

The total debit balance of capital sources mobilized in the forms specified in Clauses 1 and 2, Section II, Part B of this Circular shall not exceed 30% of the total capital construction investment capital set in the city annual budget estimates decided by the municipal People's Council (excluding capital sources mobilized for investment in projects according to the provisions of law and irregular targeted additional allocations from the central budget to the city budget for investment in projects, if any).

3. Can Tho city may apply the mechanism of providing partial interest supports to organizations which borrow capital for investment in important projects capable of retrieving capital (investment in industrial parks; environmental, public sanitation and water drainage services, etc.) in accordance with the provisions of Vietnam's law and not in contravention of treaties which Vietnam has signed. The specific level and duration of interest supports for each organization or each project shall comply with the size and capacity of the city budget. The municipal Finance Service, Planning and Investment Service and relevant services shall assist the People's Committee of Can Tho city in determining these supports which shall be allocated annually from its budget so as to arrange them in the city budget estimates for submission to the municipal People's Council for decision according to the provisions of the State Budget Law.

4. Annually, based on the budget estimates of official development assistance (ODA) sources and the commitments to Vietnam's donors, ODA capital allocation shall be prioritized for Can Tho city to invest in projects incapable of retrieving capital and infrastructure projects funded by the city budget, which shall ensure domestic capital contributions to such projects. Management methods shall comply with the State's current regulations on management of ODA capital.

5. On mobilization and efficient use of land use levies for socio-economic development investment in Can Tho city:

In order to effectively use land funds managed by the city, based on the city's land-use plans approved by competent authorities and the tasks of capital mobilization and infrastructure investment already decided by the municipal People's Committee, the municipal People's Committee may advance capital from the city budget and other mobilized sources (municipal bonds and other mobilized sources according to the provisions of law) for infrastructure projects funded by the city budget and for the relocation of production and business establishments from the inner city to suburbs or industrial parks for creation of land funds; and thereby, to auction land use rights and public properties according to regulations, so as to generate capitals sources for development investment and payment of capital amounts advanced from the city budget and mobilized capital amounts. Implementation methods shall be as follows:

- Based on the city's land-use planning and projects funded by the city budget already approved by competent agencies and the project execution schedule, the municipal People's Committee shall decide to advance capital from the city budget and other mobilized sources for these projects. The level of capital to be advanced for each investment project shall depend on its execution schedule and not exceed the cost estimate approved by competent authorities.

- The management and allocation of capital shall comply with state regulations on state budget capital management.

- The proceeds from the auction of land-use rights shall be used to repay capital amounts advanced from the city budget and mobilized capital amounts, the remainder shall be fully remitted into the city budget (collected land use levies) for investment in infrastructure projects funded by the city budget according to regulations.

C. ORGANIZATION OF IMPLEMENTATION

This Circular takes effect 15 days after its publication in "CONG BAO." The People's Committee of Can Tho city shall base itself on the guidance in this Circular to direct the Finance Service to coordinate with concerned agencies in organizing the implementation thereof and shall report any problems arising in the course of implementation to the Ministry of Finance for consideration and settlement.