Almost 37 localities report ODA disbursement rate of 0%

Online meeting with localities on the disbursement of public investment foreign loans in the first five months of 2021. Photo: PV

Only 15 of 63 localities have a disbursement rate of over 3%

In the first five months of 2021, the rate of disbursement of foreign capital only reached 2% of the estimate assigned by the Prime Minister. Many provinces and cities have not yet conducted disbursement, said Deputy Minister of Finance Tran Xuan Ha at the meeting.

The Deputy Ministerrequested to clarify causes and introduced solutions to boost disbursement in the future.

From this meeting anda meeting with ministries and sectors last week, the Ministry of Finance will review and report to the Government and the Prime Minister in an upcoming online meeting.

Reporting on the status of capital plan assignment and TABMIS entry, Director of the Department of Debt Management and External Finance (Ministry of Finance) Truong Hung Long said the total assigned public investment ODA and concessional loans in early 2021 to localities was VND63,709 billion. As of May 31, 2021, the capital for 2021 imported into TABMIS was VND48,124.18 billion (equivalent to 75.54% of the capital plan assigned at the beginning of the year).

As of May 31, 2021, the disbursed capital was VND1,100.66 billion, or 1.73% of the estimate, of which the targeted additional capital by the central budget was VND616 billion (equivalent to 1.77% of the capital plan assigned at the beginning of the year) and disbursed capital re-lending loans to localities was VND484.4 billion (equivalent to 1.68% of the capital plan assigned at the beginning of the year).

Only 15 of 63 localities have a disbursement rate of over 3%, but up to 37of 63 localities reporta disbursement rate of 0%.

To disburse the above capital, the Ministry of Finance has received 650 applications for capital withdrawal, of which 609 of 650 applications have been signed and the remaining applications have returned for ineligibility of withdrawal.

"If considering the capital plan assigned in 2021, the above disbursement rate is very low, much lower than the disbursement rate in the first five months of 2020," Long said.

Cut procedures for adjustment of investment policy

At the meeting, localities like Hanoi, Ho Chi Minh City, Ha Giang, Quang Ninh, Quang Tri, Thai Nguyen, Ha Tinh, Quang Nam and Can Thoreported their disbursement status and reflected difficulties and problems and proposed solutions to speed up disbursement of this capital.

Speaking about the difficulties for delay in disbursement of Hanoi, a representative of the Hanoi People's Committee said that objectively, due to the Covid-19 pandemic, the importation of equipment for projects such as locomotives, wagons of package 6 of the urban railway project No. 3, or bidding package 1 of Yen Xa wastewater plant project Europe and Japan were behind schedule, affecting the disbursement progress in 2021.

“For ODA projects in Hanoi, the major projects like urban railway projects are facing difficulties in implementation such as site clearance;the differences between Vietnam’s prevailing provisions and international practices; regulations of the sponsor in carrying out contracts with international contractors, leading to disputes. It is recommended that the Ministries of Planning and Investment, Finance, Transport and Construction pay attention and work together so that Hanoi could disburse ODA in 2021,"said Mr. Ha Minh Hai, Vice Chairman of Hanoi People's Committee.

The Ministry of Finance also proposed solutions to boost the implementation of projects and speed up ODA disbursement. Regarding policies and regulations, the Ministry of Finance is urgently finalizing the third draftof the Decree amending and supplementing Decree No. 97/2018/ND-CP on on-lending to submit to the Government for promulgation, in which there are regulations on removing obstacles in the value of collateral for on-lending to public service delivery units and reducing the on-lending rate of some localities which are facing difficulties in local budget balance.

The Ministry of Finance commits to complete spending control within three working days and handle applications for capital withdrawal (direct withdrawal form) within one working day the date of receiving complete and valid documents.

The Ministry of Finance also proposed the Ministry of Planning and Investment to have a mechanism to simplify or shorten procedures for adjustment of investment policies for cases subject to extension of project implementation and to have a mechanism for capital plan allocation in accordance with the characteristics of capital disbursement ODA and concessional loans.

The Ministry of Finance requested localities to review the estimate in line with the progress of projects; prioritize disbursement of remaining capital in accordance with the financial mechanism of the projects which are being deployed in the their areas; toimprove on the basis of strengthening the organization and capacity of the project management boards; to closely coordinate with the Ministry of Planning and Investment, the Ministry of Finance and relevant agencies to accelerate the adjustment of investment policies and loan agreements, so as not to let the adjustment affect the progress of implementation and disbursement of projects.

Priority is given to projects that will end in 2021

Concluding the meeting, the Deputy Minister asked localities to review the disbursement data, clearly separate the capital disbursement data 2020 to 2021 and the disbursement data under the approved 2021 estimate, thereby reporting exact figures.

The Deputy Minister also noted and agreed on the causes for the delay in disbursement of ODA, such as objective causes including the Covid-19 pandemic, foreign experts could not enter Vietnam; importation of materials and equipment in pandemic-affected countries; project equipment changes at the request of the sponsor; loan contract in a prolonged sequence.

The subjective causes are the lack of payment volume, slow processing of capital withdrawal applications; delay in bidding; problems in contract performance; delay in work performance and confirmation of the completed volume; and delay in summarizing applications for capital withdrawal.

From now until the end of the year, the Deputy Minister suggested that relevant authorities, localities and departments give drastic instructions for the project management boards to speed up the progress andwork together to remove obstacles and accelerate disbursement.

Priority should be given to projects that are likely to be disbursed in 2021 and those that will end in 2021.

“Localities need to actively adjust the allocation for projects within their localities. If there is a need to increase or decrease ODA capital in the year, localities should carefully evaluate and soon report to the Ministry of Planning and Investment to report to the Prime Minister for adjustment in the last six months of the year,"the Deputy Minister said.

Regarding mechanisms and policies, the Ministry of Finance is urgently finalizing the draft Decree amending and supplementing Decree No. 97/2018/ND-CP on on-lending to submit to the Government for promulgation and the Ministry of Planning and Investment will preside over the revision of Decree 56/ND-CP.