Disbursement of foreignloans: how to remove problems?

	Disbursement of foreign loans reaches 45% of adjusted plan
	Disbursement of public investment capital: positively move but difficulties remain
	Raise responsibility of head in capital disbursement

Many projects are allocated capital but are implementing procedures for adjusting projects. Photo: Internet.

No completed volume for disbursement

According to the Ministry of Finance, the biggest problem behind the low rate of the disbursement of ODA loans and concessional loans is that there is no volume of completed construction, so there are payment records and it is impossible to disburse.

Due to the impact of the Covid-19 pandemic, natural disasters and floods, even in areas that less affected by floods and natural disasters, the Ministry of Finance found that progress in implementing and submitting capital withdrawal applications is still slow. This needs to be further clarified and be more specific about the responsibilities ateach stage. In addition, there are many projects that have been allocated capital but are implementing project adjustment procedures (such as extending project implementation time, extending disbursement time, adjusting allocation of items of capital use), as well as loan agreement adjustments, so there has not been a sufficient basis for disbursement.

Some projects face problems about mechanisms, so the allocation or re-lending to allocate capital for implementation in 2020 has not been identified.

Another problem is that under the disbursement method of special accounts of donors such as World Bank, Asian Development Bank (ADB), JICA, many project owners have delayed completing procedures for capital withdrawal from special accounts of donors, the approval of additional withdrawals from special accounts to pay for small expenditures often takes time.

In addition, withdrawal applications prepared by project owners are incomplete, inaccurate and do not have appropriate spending plans.

December is the peak month for completing payment procedures, in which the documents and evaluation sheets to determine the completed volume and submitted dossiers to the State Treasury to control spending, make payment notes, disbursement of capital withdrawal and close the accounting book with the State budget.

Currently, the Ministry of Finance is working with the Ministry of Justice and relevant agencies and the Government Office to complete the draft Decree amending Decree No. 97/2018/ND-CP dated June 30, 2018 on re-lending ODA and foreign concessional loans, ensuring that after the Decree is revised, it will simplify the process, procedures for appraisal and signing of on-lending contracts.

Ministries and sectors must promptly report on adjusting their capital plans or report to the Prime Minister on increasing total investment. Projects that must finish in 2020 and need to carry out procedures and adjust time for capital withdrawal must immediately report to the competent authorities to ensure the withdrawal time. Ministries and sectors need to direct project management boards that have completed volume to report to the State Treasury to control spending, and report to the Department of Debt Management and External Finance and donors to make disbursement procedures, ensuring revenues and expenditures.

Report in a timely fashion

To promote the disbursement of this special capital, as 2020 is coming to an end and will be a premise for 2021, the Ministry of Finance proposed to the Government solutions such as: proposing project owners to urgently complete procedures on investment, construction, resettlement, site clearance to implement projects; handling shortcomings and problems of large projects, accelerating the disbursement of investment projects with disbursement potential, projects that have completed investment procedures and bidding, and immediately implementing the signing of bidding packages that have not been objected to by donors.

In addition, improving the capacity to implement ODA projects at the governing body, investors and project management boards while ensuring that project management staffhave high qualifications. The ministries and sectors should allocate sufficient reciprocal capital for payment according to the assigned estimates; coordinate with the Ministry of Planning and Investment and the Ministry of Finance to solve arising problems.

The Ministry of Finance also requested donors to review and reduce unnecessary approval procedures and speed up the approval time for issues that need approval. For projects in the recruitment stage of consultants to make total investment, there should be solutions to supervise the quality and progress of consultancy to avoid problems and delays, affecting the project implementation.

For proposals on cutting capital plans, ministries and sectors must determine projects subject to cuts, and clarify projects that cannot completely disburse in 2020, projects that are partially disbursed, and work with the Ministry of Planning and Investment to determine the capital allocated in the 2016-2020 period and the actual disbursed capital. Those that are facing ashortage of capital and subject to disbursement in the following years, must be proposed to include in the medium-term plan for 2021-2025 and the investment capital plan in 2021.

Regarding issues related to adjusting investment policies and loan agreements, programs and projects requiring adjustment of investment policies, the Ministry of Finance asked ministries and sectors to report to the Ministry of Planning and Investment to submit to the Prime Minister for approval of the adjustment. Under the Prime Minister's decision, the Ministry of Finance shall coordinate with the ministries and sectors to report to the Prime Minister on the adjustment of the time limit for disbursement and capital allocation under the signed loan agreements and other adjustments of the loan agreements (if any) in accordance with the regulations, the Law on State Budget and the Law on Public Debt Management.