A unique mechanism for Hai Phong city

The Government has just issued Decree No. 89/2017/ND-CP stipulating a number of specific financial and budgetary mechanisms and policies for Hai Phong city, which is effective from September 15.

The purpose of specific mechanism is to promote the rapid and sustainable development of the city’s socio-economic development; to create favorable conditions for the city to promote its potential resources, advantages and to construct Hai Phong into a green, civilized, modern and highly competitive industrial and service center port city.

Prioritized support from government

With the determination to bring Hai Phong become the key economic development area of the country; the education, training, health and science-technology center of the northern coastal region; the major traffic connection of the country, the main gateway to the sea in the North and Vietnam – China economic corridor. As a result, it will lead to the socio-economic development of localities in the region in particular and the whole country in general.

Regarding the mobilization of development investment capital for development, the city is entitled to make domestic loan for investment through the issuance of local government bonds and other mobilization forms as stipulated by law; re-borrow from the from government loans for re-lending.

Debt balance (including domestic borrowing from the issuance of locality bonds, re-borrowing from government loans for re-lending and other domestic loans in accordance with the law) of the city budget does not exceed 40% of the local budget revenues to be entitled according to decentralization and within limits  of annual state budget overspending level decided by the National Assembly.

The Government prioritizes favorable supports of partial capital from the state budget to the city budget to implement projects in form of public-private partnership (PPP) in order to serve the regions in the city and major projects which play important role for the socio-economic development of the city.

The Government also prioritizes the mobilization of official development assistance (ODA) capital for the city to implement important infrastructure projects under the city’s expenditure. The allocation of domestic reciprocal capital for these projects is guaranteed by the city budget; The Government prioritizes the allocation of preferential loans in the form of re-lend localities to implement PPP projects in the city.

For the demand of foreign loans for implementation of important projects, applied the principle: Basing on projects approved by the City People’s Council, City People’s Committee to propose programs, projects using foreign loans then submit to competent authorities for considering and making decision in accordance with the mechanism of Government borrows to lend city. The city is responsible for allocating the city budget for refunding as regulated.

People’s Committee of the city is entitled to approve the list of projects, making decision on the receipt of non-refundable aid (ODA, non-governmental organization from abroad) for programs and projects irrespective of the aid scale, except for technical assistance in relation to institutions, religions, legal policies, administrative reforms, national defense and security shall be decided by the Prime Minister. The People’s Committees of cities are responsible to receive, manage and use these aids efficiently, observe the accounting and settlement regime strictly according to the provisions of law; To periodically report to the Ministry of Finance and the Ministry of Planning and Investment in order to monitor, supervise, and generalize to report to the Prime Minister.

Specific on budget

Pursuant to total approved estimated budget, the progress of projects, the allocating capacity of the city budget and the balance of the state budget, the principle of arranging the medium and long-term state investment capital under The Law on State Investment, Ministry of Planning and Investment and the Ministry of Finance shall report to the Government for submission to the National Assembly for a decision on targeted addition to state budget allocated to the city budget for implementing projects for socio-economic development of the city and projects serving the regions within the city.

Annually, the targeted state budget for Hai Phong city shall not exceed 70% of the increase of central budget from the revenues divided between state budget and the city budget compared to the estimates assigned by Prime Minister and central budget revenues entitled to 100% as provided in the Law on State Budget compared with the estimates assigned by the Prime Minister, excluding: revenues not allocated the city to manage, not arising within the Hai Phong city but only accounting in Hai Phong city; revenues which have been authorized to use by competent authorities; revenues to be entered as revenues and expenditures and revenues may be retained by the spending units managed through the state budget according to the provisions of law; target additions are no higher than the state budget revenue increase compared to the previous year.

The determination of targeted additions on the basis of the total revenues, not including each revenue; basing on the total state budget revenue surplus and the general balance, the Government shall report to the National Assembly Standing Committee for considering and making decision on the targeted additional amount for Hai Phong city according to the provisions of the State Budget Law No. 83/2015 / QH13 and specific mechanism of Hai Phong city.

Targeted additional revenue from the increase of above source, city use to: Priority payment of construction debt; Investment in infrastructure works; To arrange reciprocal capital for ODA projects; Repayment of loans; To carry out important tasks for socio-economic development, to ensure national defense, security, social order and safety and reward the lower-level budgets. The People’s Committee of Ho Chi Minh City shall report to the municipal People’s Council on the specific capital level for each objective, task and reward to the lower level budget.

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Regarding the advance mechanism of the next year’s estimate from the central budget, targeted support, government bond capital, based on the current regulations and the capital balancing capability, The next year’s books shall be used to carry out special, important and urgent projects eligible for capital support from the central budget according to the provisions of the State Budget Law.

The city is entitled to a mechanism to support interest rates for organizations and individuals when borrowing capital for investment in important socio-economic development projects capable of recovering their capital within the scope and capability. Of the city budget and in accordance with the law.

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