Shortcomings in Decree guiding the Law on Public Investment need to be amended

Some regulations are complicated and the Public Investment Law will be revised

The Ministry of Finance said that ODA capital and preferential loans that are allocated for annual public investment and recognized as debts by the Vietnam Government, but have not yet been disbursed, shall be extended for time implementation and payment until the end of 31st December next year. Photo: Internet.

Currently, the Government has assigned the Ministry of Planning and Investment to amend shortcomings in the Law on Public Investment. At the same time, for the law amendment, some contents need to be immediately supplemented in guiding decrees to remove these shortcomings in a timely fashion for implementing the annual investment plan.

The Ministry of Finance has taken the initiative in studying the amendments of these contents. Regarding the removal of shortcomings in guiding Decrees, the Ministry of Finance has made specific comments on the amendment of the Government's Decree 77/2015/ ND-CP on the medium-term public investment plan, including the two major issues as follows:

First, allow time extension for ODA disbursement

Regarding the regulations on the time for annual disbursement of ODA capital, currently, the Law on Public Investment (Article 76) stipulates that the annual disbursement of ODA capital shall be in accordance with international treaties on ODA and inventive loans signed by foreign donors; and the foreign capital in the annual public investment plan is allowed to be disbursed in line with the progress and funding progress of the foreign donor.

According to provisions of the Law on State budget, ODA capital is a State budget source, and Article 46 in the Government’s Decree 77/ND-CP still stipulates that the disbursement time of State budget capital shall be extended until 31st December of the year after the planned year. ODA capital is implemented in accordance with Article 76 of the Law on Public Investment.

However, in fact, the disbursements from ODA and incentive foreign loans have specific characteristics. For example, the Thach Kim - Hien Hoa Road project funded by Saudi Arabia, the date of capital withdrawal request was 6th October 2016, the date of payment by the donor was 13rd January 2017, and the date of reporting on the capital withdrawal to the Ministry of Finance was 20th April 2017. The Buon Ma Thuot Drainage Project funded by Denmark, the date of capital withdrawal request was 12th January 2017 (under the capital plan 2017). However, on 16th February 2017, the donor announced the disbursement (over the deadline of recording to the State Treasury’s accounting book, 31/01/2017), while not recorded into the capital plan in 2018. Currently, withdrawn capital is temporarily suspended and has not yet been recorded.

Hence, the Ministry of Finance said that ODA capital and incentive capital which have been allocated to the annual public investment plan and have been recognized as debts by Vietnam’s Government but have been not disbursed, the time for disbursement and payment shall be extended to the end of 31 December after the planned year.

For ODA capital and incentive capital which have been allocated to the annual public investment plan and have not been recognized as debts, and have been not disbursed by the Government, the project shall be canceled. In cases where capitals are continuously recognized as debts and disbursed in the following year, they will be submitted to the National Assembly Standing Committee to supplement the investment estimate for the following year under the rule of ensuring that they are included in the overall plan on medium-term public investment of foreign capital in the period decided by the National Assembly.

This solution can lead to over-expenditures in a current year being lower than the over-expenditures decided by the National Assembly, and the over-expenditures of the following year may be higher than the over-expenditures decided by the National Assembly.

Second, competence, the time and principle of priority to use the reserve fund with specific criteria must be clarified

For the competent authority to decide the use of a 10% reserve fund of the medium-term public investment plan in ministries, branches and localities, Clause 6, Article 54 of the Public Investment Law stipulates that “the Government shall stipulate the reserve fund level in the medium-term public investment plan to handle issues arising during the implementation of the medium-term public investment plan.

Resolution No. 26/2016/QH14 dated 10/11/2016 of the National Assembly on the medium-term public investment plan for the period 2016-2020 stipulates a general reserve fund level of 10% for each capital source. Ministries, central agencies and localities will be allowed to use the 10% of the total allocated capital from the reserve fund according to the medium-term plan by each capital source (Points a, b and 2 of Article 2). The general reserve fund must be reported to the National Assembly Standing Committee for consideration and decision before disbursement (Clause 3, Article 6). Clause 2, Article 7 of Resolution No. 26/2016/QH14 also stipulates that before assigning a detailed medium-term public investment plan for the 2016-2020 period, the Government shall report to the National Assembly Standing Committee on the list of projects and allocated capital to each project.

The Law on Public Investment only assigns the Government to regulate the reserve fund level, and the Law on Public Investment and Resolution 26 of the National Assembly does not specify the assignment of the Government to guide the competency for decisions, the time and principle of priority to use the reserve fund by ministries, sectors and localities.

Currently, the medium-term plan which has been allocated (90% of the medium-term public investment plan of each ministry, sector and locality) and has been reported by the Government to the National Assembly, includes the list of projects and specific funding levels.

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In fact, the medium-term public investment plan for 2016-2020 will be allocated a part of capital for the payment of outstanding debts for capital construction. Currently, there are many projects that have not been reported on the payment of allocated outstanding debts such as: the project on upgrading the infrastructure in flood diversion and prevention areas in Ninh Binh province is VND 300 billion; The project to renovate the National Road No. 15 (connecting the Ha Tinh City - Ho Chi Minh City Phuc Dong) is VND 124.5 billion; the project to invest in building Road 12B, Km18-Km47 + 300 area, Hoa Binh province; the Project on upgrading dykes and Con Xanh embankment for the sea dykes in Nghia Hung district ...) and recovering advanced paid capital (total advanced capital of ministries, branches and localities is VND 85.667 billion but VND 53,873 billion has been collected, the remaining 31,794 billion has not been collected yet).

Thus, the Ministry of Finance has proposed that the Draft Decree needs to specify the competence, the time and the rules for priority for the use of reserve funds. The ministry also proposed the Government to consult the National Assembly Standing Committee before promulgation.