The Prime Minister of Vietnam's Directive on rectification and promotion of the management of advances in public investment from the state budget

The Prime Minister of Vietnam's Directive on rectification and promotion of the management of advances in public investment from the state budget (Image from the internet)

On July 12, 2024, the Prime Minister of Vietnam issued Directive 20/CT-TTg regarding adjustments and enhancements in the management of advances in public investment from the state budget of the Ministries, central agencies, and local authorities in Vietnam.

The Prime Minister of Vietnam's Directive on rectification and promotion of the management of advances in public investment from the state budget 

To adjust and rectify existing issues in the management of state budget advances as seen in recent times, promptly recover overdue advance balances, and ensure that advances in the forthcoming period are conformable, serving the right purposes and targets, and using the advance funds effectively without generating overdue advances, the Prime Minister of the Government of Vietnam requests the Ministries, central agencies, and local authorities to:

- Based on current legal provisions, strengthen tight and effective management of advance funds in a conformable manner; be responsible for the aggregation, monitoring, and direct instructions to investors to implement conformable management and advances of public investment capital from the state budget within the allocated plan.

- Regularly and unexpectedly inspect to adjust and address issues arising during the implementation process by investors.

- In cases where the investment decision-maker decides on an advance level higher than 30% of the contract value as stipulated in Article 10 of Decree 99/2021/ND-CP, they must base it on the progress of contract execution, the ability to recover the advance funds of the project, clearly evaluate the reasons and necessity before increasing the advance rate, and be fully responsible for their decision.

- The local People's Committees should direct the local financial agencies to cooperate with the same-level control and payment agencies to review overdue advance amounts (if any), periodically (biannually and annually) report to take measures to recover all overdue advance funds as prescribed in Clause 6, Article 10 of Decree 99/2021/ND-CP.

- Direct investors and project management boards to:

+ Comply with current regulations regarding the advance of funds. The advance fund amount, timing of advance, recovery amount for each instance, and timing for each recovery instance per the conformable must be specifically stated in the contract and align with the project's investment progress, contract execution progress, and execution volume each year. The advance fund amount and the number of advance times should be specified for each year corresponding to the contract execution progress in the respective year (if any).

+ Review the advance fund details in signed and ongoing contracts, ensuring conformability to the laws regarding management and contract advances (advance guarantee procedures, advance guarantee clauses, advance recovery clauses...); manage tightly and effectively, using advance funds for the right purposes and targets as specified in the contract. Closely monitor the validity period of the advance guarantee provided by the credit organization to ensure that the advance guarantee validity period extends until the investor recovers all the advanced amount.

+ For ongoing projects with remaining unrecovered advances: continue to monitor, urge units to promptly execute, accept completed volumes to recover the advanced funds, ensuring recovery when disbursement reaches 80% of the contract value (except for cases where the authority allows a higher advance level).

+ For overdue advance amounts: review, and specifically evaluate the reasons for each overdue advance; determine the collective and individual responsibilities for the advance recovery; propose drastic solutions and decisively implement to ensure complete recovery of overdue advance amounts (including measures like court lawsuits, sending cases to inspection agencies, the police).

+ Prepare evaluation reports on the advance and recovery situation of investment funds for each project, sent to the controlling, and transacting payment agencies, and the superior agency of the investor as per the provisions in Point b, Clause 6, Article 10 of Decree 99/2021/ND-CP.

More details can be found in Directive 20/CT-TTg issued on July 12, 2024.

Nguyen Ngoc Que Anh

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