Utilization of Temporarily Idle State Treasury Funds

The Circular clearly states the applicable entities, including: Units within the State Treasury system (KBNN); units under and subordinate to the Ministry of Finance related to the management of the State Budget (NQNN), including: the General Department of Taxation; the General Department of Customs; the Department of Debt Management and External Finance; and the State Budget Department (NSNN).

The Circular clearly stipulates one of the measures for utilizing temporarily idle state funds is to deposit them on term at commercial banks. The State Treasury (KBNN) is allowed to make term deposits of temporarily idle state funds at commercial banks with a high level of safety as rated by the State Bank of Vietnam, as stipulated in Decree 24/2016/ND-CP.

Term deposits at commercial banks are to be carried out under a term deposit contract between KBNN and the commercial bank, in compliance with legal regulations; detailing the responsibilities and rights of the parties and other relevant details of the term deposit.

The amount of term deposit at commercial banks must not exceed the stipulated term deposit limit. The term for depositing money at commercial banks must not exceed 03 months from the date KBNN completes procedures for funds transfer to execute the transaction.

Additionally, temporarily idle state funds can also be used for repurchase agreements (repos) of government bonds. KBNN is permitted to engage in repurchase transactions of all types of government bonds and treasury bills issued by KBNN listed on the Stock Exchange.

Transaction method: Electronic agreement or conventional agreement. The maximum term for repo transactions of government bonds is not more than 03 months from the date KBNN completes procedures for funds transfer to execute the transaction.

Handling temporarily deficient state funds

The Circular clearly states that the method for handling temporarily deficient state funds is the issuance of treasury bills.

Based on the revenue, expenditure, and state budget balance, and the market situation, KBNN identifies the timing and amount for the issuance of treasury bills to compensate for temporarily deficient state funds appropriately. The maximum issuance volume must not exceed the treasury bill issuance limit to compensate for temporarily deficient state funds approved by the Ministry of Finance in the state budget management plan.

The maximum term for issuing treasury bills to compensate for temporarily deficient state funds must not exceed 03 months from the issuance date.

KBNN arranges sources to fulfill the full, timely repayment of principal, interest, and related fees (if any) associated with the issuance of treasury bills to compensate for temporarily deficient state funds.

Another measure to handle temporarily deficient state funds is to prematurely withdraw term deposits.

Based on the revenue, expenditure, state budget balance, and the term deposit contract between KBNN and the commercial bank, KBNN cooperates with the commercial bank where the deposits are made to prematurely withdraw state funds deposited on term to compensate for temporarily deficient state funds.

The amount and interest rate of prematurely withdrawn deposits are executed according to the term deposit contract between KBNN and the commercial bank.

Circular 314/2016/TT-BTC takes effect from January 15, 2017.

Source: Tu Yen Quang Newspaper

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