Some Regulations on Guarantees for Advance Capital from the State Budget

The investor's advance payment to the contractor or supplier for necessary tasks to implement the contract or tasks not covered by the contract. The level of advanced capital, timing of the advance, and repayment of the advance are agreed upon by the investor and the contractor conformably. Advance payments are made after the contract takes effect; for construction contracts, a site clearance plan must also be in place according to the agreement in the contract.

Based on the need for advanced capital, the investor may make one or multiple advances for a contract, but it must not exceed the advance level specified in the contract and regulated advance level. Particularly, the investor may require the contractor to guarantee the advanced capital to ensure safety and efficiency in executing the contract.

- For contracts with an advance value greater than 1 billion VND, an advance guarantee is required. Specifically:- Before the State Treasury makes an advance for the investor to pay the contractor or supplier, the investor must submit to the State Treasury the contractor's or supplier's advance guarantee with a value equivalent to the advance amount.- The value of the advance guarantee will be reduced correspondingly with the amount of each repayment when payments are made between the investor and the contractor. The investor ensures and is responsible for the value of the advance guarantee corresponding to the remaining balance of the advance.- The validity period of the advance guarantee must be extended until the investor has fully recovered the advanced amount.

Circular 08 specifies cases where an advance guarantee is not required, including:

- Contracts with an advance value less than or equal to 1 billion VND. To ensure safe and effective use of advanced capital, the investor may, depending on specific conditions, require the contractor to guarantee the advance capital according to the above-stated regulations and be responsible for the advance guarantee requirement.- Contracts for construction carried out by the community as part of target programs;- Work carried out without a contract and tasks involving compensation, support, and resettlement (except when these tasks require the construction of works).

Regarding the recovery of advanced capital, Circular 08 specifies that advanced capital should be recovered through payments for completed contract volumes, with each repayment level agreed upon by the investor and the contractor specified in the contract, ensuring full recovery when the payment for the completed volume reaches 80% of the contract value.

For compensation, support, and resettlement tasks: After payment to beneficiaries, the investor consolidates documents, handles payment procedures, and recovers advances within no more than 30 days from the payment date to the beneficiaries, without waiting for all households in the compensation, support, and resettlement plan to have received payment before initiating advance recovery procedures.

The State Treasury urges investors to comply with the recovery of advanced capital, cooperates with investors to inspect the advanced capital to recover unused or improperly used amounts. The State Treasury is responsible for ensuring and verifying the full recovery of advanced capital when the payment for the completed volume reaches 80% of the contract value.

Quarterly, investors report on the evaluation of the implementation of advancing and recovering advances, sending reports to the State Treasury and the investor's higher authority, detailing the implementation and recovery of advanced capital.

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