Disbursement of public investment capital from foreign loans in first half of 2020 is 3.6 times higher than same period in 2019

	Speed up disbursement of public investment capital through the State Treasury
	Local State Treasuries have high investment disbursement rate
	Proposing ministries and sectors urgently deploy projects that have been allocated capital, ensuring disbursement progress of investment capital

The conference was attended by 12 ministries which were assigned foreign public investment plans and 62 provinces and cities across the country.

Difficult to fulfill tasks

The report released at the conference highlighted the actual capital disbursement in 2020 in the last six months.

By the end of June 24, 2020, disbursed capital in 2020 from foreign loans by the ministries, agencies and localities was VND7,427 billion, accounting for 13.1% of the assigned estimate.

In particular, the disbursed capital by the ministries and central agencies was 15.46% of the assigned estimate; three ministries with disbursement rates of over 20% of the capital plan were the Ministry of Transport (29%), Ministry of Defense (27.6%) and Ministry of Health (27.3%). Only the Ministry of Industry and Trade has not disbursed allocated public investment of VND138 billion.

Disbursed capital by localities reached 11.98% of the estimate, of which 14 localities disbursed over 20% of the capital plan were Hanoi, Cao Bang, Bac Kan, Dien Bien, Lao Cai, Lai Chau Son La, Nghe An, BinhDinh, Phu Yen, Tay Ninh, Ba Ria - Vung Tau, KienGiang and Soc Trang.

However, 10 localities have not disbursed allocated public investment including Bac Giang, Vinh Phuc, Hai Duong, Nam Dinh, Da Nang, NinhThuan, BinhThuan, Binh Phuoc, Dong Nai and Tien Giang.

Particularly in Ho Chi Minh City, the disbursement rate is currently 4.13% due to problems with the reimbursement for three projects (Metro 1 Ben Thanh - Suoi Tien, Improvement of Water Environment Phase 2, and Environment Sanitation of HCMC) worth VND4,600billion. If the City People's Committee, the Ministry of Planning and Investment and the Ministry of Finance work together to determine allocated value for Ben Thanh - Suoi Tien railway No. 1 and complete the procedures for reimbursement, the overall disbursement rate will increase to about 40%.

The Ministry of Finance stated that, in the first half of 2020, the economy was heavily affected by the Covid-19 pandemic, making it difficult for projects using ODA loans and concessional loans.

However, motivated by the efforts of ministries, localities and project owners, the disbursement rate of public investment capital from foreign loans under the capital plan 2020 is 3.6 times higher than the same period of 2019 although this rate is still lower than the overall disbursement rate of domestic public investment.

With the current disbursement rate and the continued negative impact of the Covid-19 pandemic, if all levels, sectors, localities and project owners do not implement drastic measures to overcome difficulties, it will be difficult to fulfill the tasks assigned by the National Assembly and the Government for ODA and concessional loans of 2020 and for the whole term of 2016-2020.

Low disbursement mainly due to subjective factors

Chairing and speaking at the conference, Deputy Minister of Finance Tran Xuan Ha said thatalthough the situation has improved, the disbursement rate of public investment and the disbursement rate of foreign capital are still very low due to both subjective and objective factors.

Objectively, according to the Deputy Minister, due to the impact of the Covid-19 pandemic, projects using foreign capital were delayed; andforeign experts also could not come to Vietnam to support their implementation.

In addition, a number of new mechanisms and policies were issued such as the Government's Decree No. 56/2020 / ND-CP on management and use of ODA and foreign concessional loans effective from May 25, 2020, which has a lot of regulations amended compared to the contents of the previous decrees (Decree 132/2018 / ND-CP, Decree 16/2016 / ND-CP), especially those related to the process of adjusting loan agreements. These amendments in mechanisms and policies have made ministries, localities and project owners confused over project implementation due to a lack of updates.

However, according to the Ministry of Finance's leader, the main reason comes from the project implementation by the governing bodies and project owners.

Many major projects, such as Vietnam National Space Center, Environment Sanitation Project phase 2 of HCMC,Hanoi City Urban Railway Construction Project Line 2, South Thang Long - Tran Hung Dao section, must be adjusted for investment policy and loan agreements with foreign countries, so there is not enough legal basis for operation, resulting in the failure to prepare capital withdrawal documents.

Many project owners delayed carrying out procedures for returning vouchers for withdrawal amounts from special accounts. According to the Ministry of Finance, in the first six months of 2020, the first withdrawal amountto the special account or additional amount to the special account was VND8,700 billion but the number of returned vouchers was only VND620 billion.

Slow site clearance, limited capacity of contractors, slow settlement of disputes between investors and contractors, delays in appraisal process by the re-lending agency for public service delivery units are reasons for the slow disbursement of public investment.

In the remaining six months of 2020, the disbursement of public investment capital from foreign loans of the Government poses many challenges for all ministries, agencies and localities.

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The Deputy Minister of Finance emphasized that if the ministries, agencies and localities do not take timely measures leading to repetition of slow disbursement of public investment and foreign loans as in previous years,it will seriously affect macroeconomic stabilization efforts, implementation of the Government's socio-economic development goals and results of socio-economic tasks of the medium-term from 2016 to 2020.