Disbursement of ODA funds has reached a very low rate, what solutions can 'accelerate' it?

VCN - VCN- Although the Government, ministries, and local authorities have been proactive from the beginning of the year, by the end of May 2024, the disbursement results of public investment funds sourced from abroad by ministries and localities still reached very low rates. This is a significant obstacle to achieving the goal of disbursing 95% of the foreign-sourced public investment funds that the Government set out at the beginning of the year.
Measures sought to tap Vietnam - China - Russia intermodal rail transport route Measures sought to tap Vietnam - China - Russia intermodal rail transport route
Gov’t determined to hasten ODA, concessional loan disbursement: Deputy PM Gov’t determined to hasten ODA, concessional loan disbursement: Deputy PM
Disbursement of ODA funds has reached a very low rate, what solutions can 'accelerate' it?
There are many reasons why the disbursement of ODA funds by ministries and local authorities has reached very low rates. Illustration: Vietnam+

Many projects are delayed due to bottlenecks in equipment price appraisal.

Following the Government's directive to consider the implementation and disbursement of ODA funds and concessional loans as one of the key political tasks of 2024, ministries and local authorities have implemented many decisive measures to direct the disbursement process. These measures include urging investors to register monthly disbursement plans; reviewing and consolidating steering committees to assign ministry leaders to directly address emerging difficulties and obstacles, and to expedite the implementation and disbursement of projects.

The Ministry of Finance has also implemented a variety of solutions to support the disbursement process, such as organizing meetings with delegations from two ministries (the Ministry of Transport and the Ministry of Agriculture and Rural Development) and three localities (Thanh Hoa, Hue, and Dak Lak) and project owners to promptly acknowledge obstacles and recommend solutions within their authority; directing the reduction of time taken to perform expenditure control and process withdrawal applications, etc. However, the result of foreign capital disbursement in the first five months of 2024 (as of May 15, 2024) by ministries and localities remains very low.

Sharing information about the project implementation and the reasons why the Ministry of Labor, Invalids, and Social Affairs (MOLISA) has not yet disbursed the 2024 capital plan, Ms. Doan Thanh Phuong (Department of Planning and Finance, MOLISA) stated that the main issue is the equipment price appraisal, as the appraisal units have refused to appraise the prices, leading to all three sub-projects being unable to proceed with the bidding packages. This price appraisal issue has been ongoing since 2022, and the Ministry has submitted several reports on this matter since 2023.

A representative from the Ministry of Education and Training (MOET), which has a disbursement rate of 0% in the first five months of 2024, stated that in 2024, MOET was allocated 629 billion VND for the project to build technical infrastructure and facilities for Da Nang University. The main obstacle preventing disbursement in 2023 and causing delays into 2024 was related to collateral and the signing of the re-lending contract. Currently, the biggest hurdle for the project is the estimation appraisal, as finding appraisal agencies and getting quotations is very challenging. To accelerate progress, the MOET representative suggested that the Ministry of Construction assist Da Nang University in quickly appraising 6 out of the remaining 13 construction items to proceed with the next steps and expressed the goal to have disbursement volumes by September 2024.

There needs to be a detailed and specific review and assessment of the disbursement capability of each project.

According to Mr. Vo Huu Hien, Deputy Director General of the Department of Debt Management and External Finance (Ministry of Finance), the main reasons for the very low disbursement rate primarily stem from the lack of completed work to disburse funds due to delays in preparatory tasks for investment. These include slow land clearance, incomplete signing of design consulting contracts, delays in bidding processes, contract signing, adjustments to basic designs, projects undergoing procedures for investment policy adjustments, project adjustments, loan agreement adjustments, and capital planning not aligning with the project implementation progress. This reality indicates that the goal of disbursing 95% as set by the Government in Resolution No. 01/NQ-CP is very difficult to achieve.

To strive for a high disbursement rate for ODA and concessional loans as assigned by the Prime Minister for 2024, the Ministry of Finance suggests that the Ministry of Planning and Investment (MPI) should support localities in accelerating the progress and procedures in extending the time for capital allocation to avoid affecting the project's disbursement progress. Additionally, clearer guidance should be provided to localities on the authority to approve project adjustments for projects implemented across multiple agencies.

In addition, local authorities need to conduct a detailed and specific review and assessment of the disbursement capability of each project, particularly paying attention to projects whose planning year is the final disbursement year to ensure sufficient funds for the projects and avoid the need for disbursement extensions, implementation time extensions, and additional administrative procedures. For projects that are unable to complete the planned workload on schedule, funds should be cut or transferred, and a written proposal for cutting, reducing, or reallocating funds should be sent to the Ministry of Planning and Investment (MPI) and the Ministry of Finance by June 30, 2024, for coordination. For programs or projects requiring investment policy adjustments, local authorities need to report and closely coordinate with MPI to submit the adjustment proposals to the Prime Minister for approval. Based on the Prime Minister's approval and decisions on investment policy adjustments, local authorities will coordinate with the Ministry of Finance to adjust the disbursement deadlines and reallocate funds according to the signed loan agreements (if any).

For projects with obstacles in the preparation and implementation phases, local authorities and project management units are responsible for promptly completing investment and construction procedures, resettlement and land clearance to implement the projects; finalizing technical designs, resolving difficulties in contract bidding; and quickly addressing any issues arising in each stage of project implementation. Central project management units of ODA projects under the supervision of ministries and agencies should provide guidance and training on expertise and capacity building for local project management units to ensure the projects are implemented uniformly and effectively.

By Thu Hien/Phuong Linh

Related News

The textile market recovered, businesses accelerated

The textile market recovered, businesses accelerated

VCN - Although the Government, ministries, and local branches have actively participated from the beginning of the year, by the end of May 2024, the disbursement results of public investment funds sourced from abroad by ministries and localities still reached very low rates. This is a significant obstacle to achieving the goal of disbursing 95% of the foreign-sourced public investment funds that the Government set out at the beginning of the year.
How does the Land Development Fund work effectively?

How does the Land Development Fund work effectively?

VCN - Speaking at the Conference to collect opinions on the draft Government Decree regulating the Land Development Fund held by the Ministry of Finance on April 22, Deputy Minister of Finance Bui Van Khang emphasized the necessity of the development of the Government Decree regulating the Land Development Fund.
Be concerned about hindering cooperation when limiting deposits at people

Be concerned about hindering cooperation when limiting deposits at people's credit fund

VCN - The Vietnam Cooperative Union said that the regulation that the total amount of deposits not exceeding 20 times the equity causes many difficulties, hindering the demand for cooperation, capital contribution, and idle capital mobilization from the people of the people's credit fund.
Supplement regulations on lending activities: Credit barriers or tighter risk control?

Supplement regulations on lending activities: Credit barriers or tighter risk control?

VCN - At the end of June, the State Bank of Vietnam (SBV) issued Circular No. 06/2023/TT-NHNN (Circular 06), amending and supplementing some provisions of Circular 39/2016/TT-NHNN dated December 30, 2016, which regulates lending activities of credit institutions (CIs) for customers. With the additional provisions on certain capital needs that CIs are not allowed to lend to, there are concerns that it may create "credit barriers" for the lending stream.

Latest News

Perfecting the legal framework to promote upgrading the stock market

Perfecting the legal framework to promote upgrading the stock market

VCN - After receiving comments from affected subjects including organizations, individuals, and market members, the State Securities Commission has just completed a draft circular amending 4 circulars regulating: stock trading on the stock exchange system; clearing and settlement of stock exchanges; operations of securities companies and information disclosure on the stock market.
Margin loan continues hit new record

Margin loan continues hit new record

VCN - The need to use leverage in the stock market is still very high, shown by the level of outstanding loans at securities companies continuing to increase sharply in the second quarter of 2024.
Vietnam needs comprehensive regulatory framework to attract green financing

Vietnam needs comprehensive regulatory framework to attract green financing

Vietnam needs a clear regulatory framework and solutions to promote the green finance market and encourage private capital flows into green fields, experts have said.
2025 budget estimation must be practical, accurate and efficient

2025 budget estimation must be practical, accurate and efficient

VCN - Directing the 2025 state budget estimation, Minister of Finance Ho Duc Phoc emphasized that units must ensure that the 2025 budget estimation must be practical, accurate, efficient, and meet the requirements for performing professional and political tasks assigned to central and local agencies.

More News

The corporate bond market will be more vibrant in the second half of the year

The corporate bond market will be more vibrant in the second half of the year

VCN - In the first half of 2024, with bond maturity pressure continuing to increase, corporate bond issuance has shown many positive signs compared to the previous year. According to forecasts, businesses' need to borrow and issue corporate bonds will accelerate in the second half of 2024.
Prioritize resources and promptly supplement capital for policy credit

Prioritize resources and promptly supplement capital for policy credit

VCN- In the near future, to further promote the effectiveness of policy credit, the Ministry of Finance will continue to preside over and coordinate with relevant ministries, branches and the Vietnam Bank for Social Policies (VBSP) to implement many key solutions.
Measures suggested to boost startups’ access to capital

Measures suggested to boost startups’ access to capital

The recent vigorous growth of startups in Vietnam has attracted domestic and foreign investors, but insiders recommended more efforts be made to facilitate startups’ access to funding from investors so that they can live up to potential.
Inflationary pressure seen from monetary policy

Inflationary pressure seen from monetary policy

VCN - The economy went through the first half of the year, inflation is still under control and forecast to reach the target set by the National Assembly and the Government. However, variables from the currency market such as exchange rates, interest rates, credit..., even gold prices, are issues that need to be paid attention.
Banks with the problem of promoting credit growth

Banks with the problem of promoting credit growth

VCN - It is estimated that by the end of June 2024, the economy's credit growth will reach nearly 4.5%. This number is still far from the yearly credit growth target of 14-15%.
Proposal to increase Special Consumption Tax on tobacco products

Proposal to increase Special Consumption Tax on tobacco products

VCN - At the workshop Special Consumption Tax on cigarettes held by Vietnam Tax Consulting Association and the Institute of Financial Strategy and Policy on July 16, experts and businesses clarified the goals and content of amended the special consumption tax policy on tobacco products. According to experts, there cannot be a solution that fully ensures the benefits of both consumers, the state and businesses, but it is necessary to choose the most optimal option to achieve the initially set goals.
Savings of individual customers at banks hit record high

Savings of individual customers at banks hit record high

In spite of low interest rates, figures from the State Bank of Vietnam (SBV) released this week show deposits of individual customers increased by more than VNĐ39.7 trillion in April, to reach more than VNĐ6.7 quadrillion.
Managing fiscal policy has achieved many positive and comprehensive results

Managing fiscal policy has achieved many positive and comprehensive results

VCN - On July 15, the Ministry of Finance held an online conference to summarize state budget financial work in the first 6 months of the year, implementing tasks in the last 6 months of 2024. Minister of Finance Ho Duc Phoc attended and directed the conference. Also attending the Conference were Deputy Ministers of Finance, leaders of units under the Ministry of Finance.
Determine tools, policy for inflation control

Determine tools, policy for inflation control

VCN - According to economic expert Associate Professor, PhD. Ngo Tri Long (photo), former Director of the Price Market Research Institute (Ministry of Finance), inflation is an issue that needs special attention, especially related to the management of monetary policy, interest rates, increasing prices of goods and services...
Read More

Your care

Latest Most read
Perfecting the legal framework to promote upgrading the stock market

Perfecting the legal framework to promote upgrading the stock market

State Securities Commission has completed a draft circular amending 4 circulars regulating: stock trading on the system; clearing and settlement; operations of securities companies and information disclosure.
Margin loan continues hit new record

Margin loan continues hit new record

The need to use leverage in the stock market is still very high, shown by the level of outstanding loans at securities companies continuing to increase sharply in the second quarter of 2024.
Vietnam needs comprehensive regulatory framework to attract green financing

Vietnam needs comprehensive regulatory framework to attract green financing

Vietnam needs a clear regulatory framework and solutions to promote the green finance market and encourage private capital flows into green fields, experts have said.
2025 budget estimation must be practical, accurate and efficient

2025 budget estimation must be practical, accurate and efficient

VCN - Directing the 2025 state budget estimation, Minister of Finance Ho Duc Phoc emphasized that units must ensure that the 2025 budget estimation must be practical, accurate, efficient, and meet the requirements for performing professional and political
The corporate bond market will be more vibrant in the second half of the year

The corporate bond market will be more vibrant in the second half of the year

VCN - In the first half of 2024, with bond maturity pressure continuing to increase, corporate bond issuance has shown many positive signs compared to the previous year. According to forecasts, businesses' need to borrow and issue corporate bonds will acc
Mobile Version