Opening a Bank Account to Receive IDA Funds: How to Do It Properly?

Opening a bank account to receive IDA funds: How to do it correctly? (Illustration)

Article 8 Circular 123/2010/TT-BTC stipulates the opening of accounts, exchange rates, and account interest as follows:

- The Central Coordination Committee and 6 Provincial Project Management Boards open the following accounts:

- The Central Coordination Committee opens: (1) a Designated Account in foreign currency at the service bank system to receive funds from the IDA loan source; (2) a counterpart fund disbursement account in VND at the State Treasury to be disbursed and paid for project contents implemented by the Central government.- Each Provincial Project Management Board opens: (1) a Designated Account in foreign currency at the corresponding provincial branch of the service bank to receive funds from the IDA loan source; (2) a counterpart fund disbursement account in VND at the provincial State Treasury to be disbursed and paid for project contents implemented by the province.

- Each District Project Management Board opens the following accounts:

- A project account in VND at the district service bank to receive funds from the province's Designated Account.- A counterpart fund disbursement account in VND at the district State Treasury to be disbursed and paid for project contents implemented by the district.

- Each Commune Development Board opens: a project account in VND at the district service bank to receive funds from the district's project account.

- Exchange rates for payment and accounting:

- The payment and accounting exchange rate for expenditures from the Designated Account is the buying exchange rate of the service bank at the time of payment.- For district and commune project accounts, the Provincial Project Management Board uses the buying exchange rate of the service bank at the time of transferring funds to the district and commune project accounts, and this exchange rate will be used when preparing disbursement requests to supplement the Designated Account for the advanced/disbursed amount.

- Account interest:

- Interest accrued on the Designated Account opened at the service bank is revenue of the State Budget (NSNN). The service bank must open a separate account to monitor accrued interest. Account interest is used to pay service fees of the service bank.- When the project ends, unutilized accrued interest must be returned to the State Budget. In the case where accrued interest is insufficient for paying bank service fees, the Central Coordination Committee/Provincial Project Management Board prepares a plan to request counterpart funds for payment.- Annually, the Central Coordination Committee is responsible for reporting to the Ministry of Finance on the utilization of accrued interest on the balance of the project Designated Accounts.

For further details, see Circular 123/2010/TT-BTC, effective from October 03, 2010.

Nguyen Phu

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