Principles of financial management in Vietnam for foreign non-repayable aid

Principles of financial management in Vietnam for foreign non-repayable aid

Pursuant to Article 3 of Circular 23/2022/TT-BTC (effective from 20/05/2022), there are provisions on the principle of financial management for foreign non-refundable aid as follows:

1. All assistance grants must be classified, managed, monitored, and accounted for depending on sponsorship methods (program, project, or non-project grant); nature of state budget expenditure (recurrent expenditure, investment expenditure, or other state budget expenditure), methods of organizing implementation (the foreign parties sponsor directly or authorize an organization to implement or owners of programs, projects in Vietnam implement).

2. Non-refundable assistance grants recorded as state budget revenue shall be promptly and adequately accounted, estimated, and finalized in accordance with state budget expenditure and revenue finalization and expenditure finalization of programs, projects, and assistance grant.

3. Presiding authorities are responsible for producing state budget expenditure and revenue estimates within their implementation capacity in the year to receive, implement, account, and finalize state budget revenue and expenditure for assistance grants under this Circular; promptly proposing additional estimates in case of irregular assistance grant revenue and/or expenditure demand; receiving assistance grant only when necessary and capable of using it reasonably.

4. End-of-year handling of assistance grant revenue and expenditure estimates shall conform to regulations and law on state budget management.

5. All monetary assistance grant under direct management of owners of programs and projects in Vietnam shall:

a) be transferred to separate accounts opened at the State Treasury or financial institutions upon receipt; be monitored, accounted, and finalized separately for each assistance grant.

b) be transferred to personal, hired, lent, or shared accounts of individuals, agencies, or entities upon receipt. Do not open accounts overseas to receive assistance grant unless otherwise required by the law of the sponsoring party and prescribed under Agreement/Convention on assistance.

6. Expenditure of monetary assistance grant implemented by owners of programs, projects in Vietnam must be controlled in accordance with regulations on state budget expenditure control.

7. The accounting into state budget shall be implemented on the basis of propositions of owners of programs, projects, and non-projects, estimates assigned by the authorities, and payment instruments as per the law.

8. With respect to assistance grant provided in form of commodities, exhibits, structures, or turnkey assistance, presiding authorities are wholly responsible for managing, monitoring, distributing, and cooperating with sponsors in determining value of exhibits provided to the Vietnamese party and account state budget revenue, expenditure as per the law.

What are tasks and powers of financial agencies and commercial banks in Vietnam in financial management of foreign non-reimbursable aid?

Pursuant to Article 4 of this Circular, the tasks and powers of financial agencies and commercial banks in financial management of foreign non-refundable aid are as follows:

1. Ministry of Finance shall

a) Guide financial management policies for assistance.

b) Inspect and supervise the implementation of regulations on state management for the management and use of assistance of central government budget.

c) Appraise annual assistance grant revenue and expenditure statements of the central government budget.

2. Department of Finance shall

b) Inspect and supervise the implementation of regulations on state management for the management and use of assistance grant of local government budget.

b) Appraise annual assistance grant revenue and expenditure statements of the provincial government budget.

c) Produce reports in accordance with regulations and law and this Circular.

3. State Treasury shall

a) Open accounts to allow agencies and entities to receive assistance grant.

b) Monitor assistance grants transferred to accounts of owners of programs and projects, control expenditure, disbursement, statement, record state budget revenue and expenditure for assistance grant sources.

c) Produce reports in accordance with regulations and law and this Circular. In case assistance is granted following domestic financial mechanisms, reports shall be produced and submitted in accordance with Circular No. 15/2021/TT-BTC dated February 18, 2021 of the Ministry of Finance.

4. Customs authority shall

a) Conduct inspection and grant customs clearance for aid goods.

b) Produce reports in accordance with regulations and law.

5. Commercial institutions where owners of programs, projects open accounts to receive assistance grant shall

Disburse the assistance grant, provide information, and produce in accordance with regulations and law and this Circular.

Best Regards!