This means ODA would account for 85.6 percent of the total investment for the 11.5-kilometer section of Hanoi’s Metro Line 2, the municipal People’s Committee said in a proposal sent to the city People’s Council.

The city budget will provide VND5.11 trillion ($220.3 million) in reciprocal capital for this project, which is expected to cost VND35.6 trillion ($1.53 billion) in total, according to the proposal.

The use of ODA, which will come from the Japan International Cooperation Agency (JICA), will be appropriate because this capital has a repayment period of 30 years, a grace period of 10 years, and interest of 0.1-0.2 percent a year. This is much lower than what the local government would have to pay if it raised money through bonds which has interest rates around 7 percent per year, the committee said.

It also said that the capital city’s current outstanding debt is VND10.69 trillion ($460.7 million), and this is expected to reach VND11.74 trillion ($505.9 million) by 2020.

Along with other ODA loans Hanoi is expected to take, its total outstanding debt by 2021 will be VND66.21 trillion ($2.85 billion), but this would still be below the city’s VND73.2 trillion ($3.15 billion) debt ceiling, the committee said.

The section on Hanoi’s Metro Line 2, which will run between Tran Hung Dao Street and the Hanoi Railway Station, was scheduled to be completed in 2015 with a total investment of VND16 trillion ($690 million).

But last week, the Ministry of Planning and Investment submitted to the National Assembly a report proposing that the project cost is raised by 82 percent to VND35.67 trillion ($1.5 billion), and the deadline deferred by 12 years to 2027.

Hanoi plans to build eight urban railway lines with a combined distance of 305 km, including three monorail segments, as per its development plan for 2030 with vision towards 2050.