Foreign aid disbursement falls way short of 2020 target

It is necessary to disburse the government’s foreign borrowings as quickly as possible, as they are important resources for the country’s development

According to the Ministry of Planning and Investment, in the first 11 months of 2020, 71.4 percent of the 2020 public investment disbursement target set by the Prime Minister was fulfilled, up 17.44 percent from the 53.96-percent rate in the same period last year.

Minister of Planning and Investment Nguyen Chi Dung said the disbursement had been speeded up since July and was relatively rapid in October and November 2020. Fifteen ministries and centrally governed organizations, and 18 localities reached a public investment disbursement rate of more than 75 percent, nine of them of more than 85 percent.

Truong Hung Long, Director of the Department of Debt Management and External Finance under the Ministry of Finance, said at a December 7 conference that ODA disbursement progress in the 11-month period improved significantly compared to the first half of the year due to determined efforts by national and local authorities.

Tardy disbursement of public investment

However, Vietnam disbursed VND6.312 trillion in foreign loans in the first 11 months of 2020, accounting for only 34.65 percent of the yearly target set early in 2020 and 45.51 percent of the adjusted target (VND4.346 trillion). Deputy Minister of Finance Tran Xuan Ha said more than 50 percent of foreign loans need to be disbursed within the final two months of 2020 to attain the target.

On October 29, Prime Minister Nguyen Xuan Phuc ordered authorities to speed up the disbursement of ODA and foreign loans for 2020 given its critically-low level.

Chairing a video conference, the Prime Minister stressed the need to disburse the government’s foreign borrowings as quickly as possible, as they are important resources for the country’s development.

A number of localities completed only 39.5 percent of the 2020 disbursement plan, with Hoa Binh Province disbursing only 15 percent of its allocated capital for 2020 in the first 10 months of 2020.

Many ministries, sectors and organizations reached a low disbursement rate, including the Ministry of Planning and Investment, the Ministry of Culture, Sports and Tourism, among others. The Ministry of Agriculture and Rural Development committed to disbursing all of its allocated foreign loans but reached a disbursement rate of only 41.7 percent as of November 30.

The Ministry of Planning and Investment attributed the tardy disbursement to impractical ODA planning, difficult site clearance procedures, complicated procedures for project assessment and approval, and inconsistent and inadequate ODA-related laws and regulations.

Deputy Minister of Transport Nguyen Ngoc Dong said the biggest problem faced by ministries and sectors is the lack of documentation showing the extent of completed construction that made disbursement impossible.

The slow disbursement is also attributed to the Covid-19 pandemic and natural disasters. The snail’s pace of disbursement was caused by slow site clearance, inadequate reciprocal funds, and inept contractors, the Prime Minister pointed out.

A Ministry of Finance representative attributed the low disbursement rates to delay in site clearance and irresponsibility of project owners and other related parties.

Other issues include the complicated procedures for implementing public projects, contractors’ limited capacity and inefficient cooperation between localities and central agencies, he asserted.

As public investment is a key measure to boost economic growth, faster disbursement of public funds, including ODA, is essential, Truong Hung Long, Director of the Department of Debt Management and External Finance under the Ministry of Finance, said, adding that it also reflects Vietnam’s ability to utilize funds it receives from investors and donors.

Accelerating disbursement before year’s end

The Ministry of Planning and Investment said Vietnam used well preferential ODA from the World Bank and the Asian Development Bank, and ODA and foreign loans will remain important for the country’s major socioeconomic infrastructure projects.

The ministry considers disbursement of state and ODA capital an important task of 2020 and has asked relevant authorities to find solutions to speed up the disbursement in order to promote trading and production activities. It proposed that the government reduce state capital investment for ministries, centrally governed organizations and localities that reached a disbursement rate of less than 60 percent as of September 30, 2020. According to the Ministry of Finance, 61 of the 63 localities and 13 of the 14 ministries and centrally governed organizations allocated with foreign loans reached a disbursement rate of less than 60 percent. About VND11.67 trillion worth of foreign capital for 2020 will be withdrawn to the state budget to reallocate to other ministries, organizations and localities in need of the capital.

Prime Minister Nguyen Xuan Phuc asked local leaders to adopt more drastic measures, work to clarify the roles and responsibility of investors, and enhance coordination with ministries and sectors.

Leaders must be responsible for performing their duties and must discipline any organizations or individuals hampering disbursement.

Meanwhile, ministries and sectors need to improve the legal framework and compile ODA plans for the next five years in a more effective manner.

The Ministry of Planning and Investment and the Ministry of Finance are entrusted with simplifying project approval and adjustment procedures, he said.