Chapter II

MANAGEMENT OF HO CHI MINH CITY’S BUDGET

Article 4. Estimated expenditures of Ho Chi Minh city

Estimated expenditures of Ho Chi Minh city shall be calculated according to principles, criteria and norms for distribution of its budget of expenditures that have been decided by the National Assembly’s Standing Committee to be applied in the period of budget stabilization of local subdivisions.

Article 5. Budget deficit

1. The city’s budget may be overspent on condition that such overspending is used for investing in development of projects specified in the mid-term public investment plan decided by the People's Council as prescribed by Clause 5 Article 7 of the Law on State Budget.

2. The limit for the city’s budget deficit shall be subject to the National Assembly’s annual resolution. The amount of the city’s budget deficit shall be decided by the city’s People’s Council but shall not be allowed to exceed the limit for the budget deficit subject to the National Assembly’s annual resolution.

3. The city’s budget deficit shall be made up for by domestic borrowed funds derived from issuance of local government’s bonds, on-lending of funds by the Government to the city and other domestic loans stipulated by laws. The city shall not be allowed to directly take out any foreign loans to offset its budget deficit.

4. The outstanding balance of borrowed fund (including domestic borrowed funds derived from issuance of local government’s bonds, on-lending of funds by the Government to the city and other domestic loans stipulated by laws) as part of the city's budget shall not be allowed to exceed 70% of the amount of revenues in the local budget that is received according to the stated mandate. Local budget revenues shall be identified on the basis of the city’s proposed budget approved by the National Assembly in the budget year.  Where it is necessary to take out borrowed funds to execute important infrastructure projects but the outstanding balance of borrowed fund owed by the city's budget exceeds the limit stipulated by this Clause, Ho Chi Minh city People's Committee shall make a report on this to the Government that then proceeds to present it to the National Assembly’s Standing Committee for its review before filing a petition for the National Assembly’s decision.

Article 6. On-target bonus and supplementary amount relative to an increase in revenue of the central budget compared with the Prime Minister’s mandated budget

1. On an annual basis, where total revenue of the central budget increases in comparison to the National Assembly’s approved budget and revenues collected by the city as payment to the central budget increases in comparison to the city’s mandated budget, subject to regulations set out by the Law on State Budget, the Government shall petition the Standing Committee to consider approving on-target bonuses and supplementary amounts relative to the increased amount of revenues of the central budget in accordance with Clause 2 and 3 of this Article.

2. On an annual basis, where the realized amount of central budget revenues coming from revenues distributed between the central budget and the city's budget increases compared with the Prime Minister's mandated budget, the city's budget shall receive a bonus that is equal to 30% of this increased budget and does not exceed the amount of central budget revenues that increases compared with the previous budget year’s realized amount of revenues.

3. The city shall annually receive an on-target supplementary amount from the central budget that does not exceed 70% of the amount of central budget revenues increasing due to revenues distributed between the central budget and the city's budget in comparison with the Prime Minister’s mandated budget (the portion of revenue that remains after the portion of revenue is given as an on-target bonus as specified by Clause 2 of this Article), and of revenues wholly owned by the central budget as referred to in Point b, c, d, g, h, i, q Clause 1 Article 35 of the Law on State Budget that increase in comparison with the Prime Minister’s mandated budget (except for revenues that do not fall under the city’s authority, do not arise but are collected within Ho Chi Minh city; revenues authorized for used by a competent authority; amounts recorded as revenues or expenses in an accounting book and revenues retained for use by city-governed entities which are administered through the state budget in accordance with applicable laws). The on-target supplementary amount shall not be allowed to exceed the amount of central budget revenues that increases within the city in comparison with the previous budget year’s realized amount of revenues.

The on-target supplementary amount shall be calculated based on total revenue rather than separate revenues.

4. In reliance on the on-target bonus and supplementary amount coming from the increased amount of central budget revenues that are specified in the resolution of the National Assembly’s Standing Committee, Ho Chi Minh city People’s Committee shall make a report to Ho Chi Minh city People's Council to obtain its approval for use of such bonus and supplementary amount for implementation of infrastructure programs or projects, repayment of loan debts owed, fulfillment of important tasks and grant of bonuses to the city’s budget subdivisions. 

Article 7. Financial reserve fund

1. The city’s financial reserve fund is a state-controlled financial fund established under the provisions of Article 11 of the Law on State Budget.

2. The financial reserve fund shall be derived from the following sources:

a) Amounts set aside within the annual budget of expenditures;

b) Budget residue or surplus prescribed by Clause 1 Article 72 of the Law on State Budget;

c) Increased amounts of budget revenues prescribed by Clause 2 Article 59 of the Law on State Budget;

d) Interest on deposits into the financial reserve fund;

dd) Other financial sources prescribed by laws.

The amounts set aside for the financial fund as referred to in Point a, b and c of this Clause shall be subject to the resolution of Ho Chi Minh city People's Council after receipt of a report from Ho Chi Minh city People’s Council provided that these stipulated amounts match demands for financial reserve and suit the city's budget balancing capability in reality.   

3. Ho Chi Minh city People’s Committee shall be entitled to use an advance given by the city's reserve fund for investing in significant infrastructure projects that are defined in the city’s budget of expenditures but for which financing within the scope of the mid-term public investment proposal has not been arranged. The duration of that advance shall not exceed 36 months from the date of grant of such advance.

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