Disbursement of public investment, especially ODA and foreign loans, is becoming a decisive issue for economic growth in 2020 – a year of unpredictable changes. However, the disbursement plan of public investment capital in 2020 from foreign loans of ministries, agencies and localities only reached 13.1% compared to the estimate assigned in the last six months. How will this complete the goal? The answer to this question requires the synchronism and consistency of an entire system.

The Cat Linh - Ha Dong elevated railway project continues to be delayed.
Photo: internet

Projects are "waiting"

Subjective difficulties can be identified in the disbursement of public investment capital from ODA and foreign loans through the naming of some typical projects.

They are major transport infrastructure projects, such as the No. 1 urban railway No. 1 construction project Ben Thanh - Suoi Tien section; Nhon-Hanoi Station urban railway project; Cat Linh - Ha Dong elevated railway project. These projects are waiting for supervision,consultancy and contractors, seriously affecting the progress of the projects. In addition, waiting for the sponsors’ approval for bidding packages and each activity also affects the progress of ODA projects in general.

In addition, many projects are stuck with adjustment procedures. The characteristics of projects using ODA and concessional loans with long preparation time and long completion of investment procedures lead to the situation that many loan agreements, despite being signed, have arranged estimates, so disbursements cannot be implemented immediately.

It can be mentioned the project of health human resource training using the Asian Development Bank (ADB) loan worth US$88.6 million was signed in 2018, but so far the disbursement has not been implemented. the World Bank-assisted project of improving the quality of higher education worth US$155 million was signed in 2018, but by 2020, the disbursement can be implemented; Hanoi City Urban Railway Construction Project (Line 1) Yen Vien - Ngoc Hoi section using Japan International Cooperation Agency (JICA) loan worth US$144 million was signed in 2013, so far the disbursement has not been conducted and is expected to be cancelled.

Because of the long preparation time, many projects have to apply for extensions of the implementation time.

According to the Ministry of Finance, from the beginning of 2020, there have been 33 loan agreements that have to apply for extension and adjustments tosponsors. Of which, projects with  large estimates in the 2020 plan are the Vietnam Space Center project funded by JICA (VND1,970 billion), the project of constructing the Lo Te - Rach Soi Highway funded by South Korea (VND700 billion), Lach Huyen Port Infrastructure Construction project financed by JICA (VND340 billion), the Ho Chi Minh City Environmental Sanitation Project Phase 2 financed by WB (VND1,000 billion), Ha Noi Urban Railway project section 2, the South Thang Long - Tran Hung Dao section financed by JICA (VND1,157 billion).

In addition, the objective impacts are unavoidable. In the first months of 2020, the domestic and world economy was heavily hit by the Covid-19 pandemic, causing many activities to be stagnated, of which there was the disbursement of ODA and concessional loan projects of ministries, agencies and localities because most of these projects are associated with foreign factors from the stage of importing machinery and equipment to mobilizing foreign experts, employees and contractors and supervision and consultancy.

In addition, 2020 is the year to start applying a number of changes in policies and mechanisms related to the evaluation of total investment and construction investment costs, making the implementation confused, directly affecting disbursement progress.

Moreover, the disbursement of the 2020 capital plan along with the continuous disbursement of the assigned estimates of 2019 also greatly affects progress. In fact, the delayed disbursement in 2019 and the extended and transferred capital are almost the amount to be disbursed for the whole of 2020.

Disbursement progress publicized for monitoring

According to Mr. Hoang Hai, Deputy Director of the Department of Debt Management and External Finance, Ministry of Finance, in order to contribute to promoting the recovery and development of the economy which is being heavily affected by the Covid-19 pandemic, the Ministry of Finance proposed to the Prime Minister to direct ministries, agencies and localities to consider the completion of the public investment capital disbursement plan in 2020 as an important political task and a criterion to inspect, supervise and evaluate the level of task fulfillment.

A number of criteria are also clearly specified. Before July 31, 2020, ministries, agencies and localities should have clear and specific commitments on the targets of completing the disbursement of public investment capital and ODA and concessional loans with specific measures. At the same time, on the 15th and 30th of every month, there must be a review and comparison of disbursement data with the Ministry of Finance in order to publish on the websites of the Government and the Ministry of Finance for reporting to the Prime Minister on the progress of implementing specific commitments of each ministry and locality.

In addition, Mr. Hai said, for cases which are unable to fully disburse the allocated capital,the Ministry of Finance also requests the units responsible for evaluating the ability to disburse capital from now until the end of the year to report to the Ministry of Planning and Investment for submission to the Government for revising down budget estimates for transferring (revising up) the estimates to other ministries, agencies and localities that need additional capital (implemented before August 31, 2020); and to proactively adjust estimates for projects within the funding sources of ministries, agencies and localities that have been allocated by the Government to ensure sufficient capital for projects in need according to the disbursement progress.

For the remaining foreign capital allocated in previous years, if it is possible to be disbursed, the Ministry shall propose the Prime Minister to direct the Ministry of Planning and Investment and other ministries, agencies and localities to consider the possibility of reallocation within the scope of public investment plan for the whole period of 2016-2020; to sum up the missing public investment plansfor the Ministry of Planning and Investment to synthesize and balance, but the allocated amount does not exceed the plan assigned by the National Assembly.

For programs and projects that need adjusting investment policy, the ministries, agencies and localities shall report to the Ministry of Planning and Investment for submission to the Prime Minister for approval of the investment adjustment policies. On the basis of the Prime Minister's approval and decision on adjustments to investment policies, ministries, agencies and localities shall work with the Ministry of Finance to adjust the disbursement and capital allocation terms according to the signed agreements (if any).

"The Ministry of Finance has worked with the project management and sponsors in capital disbursement and withdrawal; workedwith the managing agencies and sponsors in solving difficulties in disbursement; worked with Vietnam Development Bank to complete the procedures for disbursement and debt acknowledgment," Mr. Hai said.