Vietnam: Supplementing rules for opening and managing an account to receive advances of ODA or concessional loan

Specifically, Decree No. 132/2018/ND-CP of Vietnam’s Government stipulates that the State Treasury or serving bank shall open an advance account for the project owner or the Ministry of Finance to serve the project’s payments, ensuring the direct flow of aid to the project without any intermediate account.

- If a project has more than one source of aid, each of them shall have a separate account to facilitate monitoring of capital disbursement.

- If a project is executed by multiple units appointed by the governing body, the project owner shall open sub-accounts at the branches of the serving bank or State Treasury.

The currency of the accounts shall be the currency of the loan (unless a VND account is accepted by the Ministry of Finance).

Moreover, the management of interest on the advance account is as follows:

- Interest generated by the advance account shall be separately monitored and used for payment of banking fees as prescribed. The banking fees are considered expenses of the project. If the interest is not adequate to cover the banking fees, the project owner shall prepare an estimate and pay them with the reciprocal capital;

- If the project is entirely funded by the state budget, the unused interest on the advance account shall be transferred in full to the state budget. If the project is entirely funded by on-lent capital, the unused interest is considered a revenue of the project owner. If the project is partially funded by on-lent capital, the unused interest shall be distributed according to the on-lending ratio.

More details can be found in Decree No. 132/2018/ND-CP of Vietnam’s Government, which takes effect from October 01, 2018.

-Thao Uyen-

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