Drastic measures to accelerate disbursement of public investment capital

	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
	Disbursement of public investment capital delayed by Covid-19 epidemic

The delegation led by Minister of Finance Dinh Tien Dung works with Cao Bang on the disbursement of investment capital (July 2020).

Solving problems in a timely fashion

Following the direction of the Prime Minister, in order to accelerate the disbursement progress, the Ministry of Finance has sent many delegations to inspect and urge disbursement led by the leaders of the Ministry of Finance to work with ministries, agencies and localities. Minister of Finance Dinh Tien Dung directly led two delegations to work with four localities, namely Bac Kan, Cao Bang, Lang Son and Hai Duong. Accordingly, many problems were disclosed.

The Hanoi and Ho Chi Minh City urban railway projects have to implement the procedures to adjust loan agreements with foreign countries so there is no disbursement amount. A few projects, which started construction but are in the process of evaluation of construction drawings, have not yet disbursed; and some projects that lasted from 2019 to 2020 are currently in the process of finalizing completed projects, so they have not yet disbursed.In addition to the objective difficulties such as the Covid-19 pandemic, capital resources, or inherent problems such as site clearance, resettlement and newly issued regulations, the implementation has been identified as the main reason. For example, a number of projects which have been arranged with a large public investment capital plan in 2020, the disbursement rate is still low, such as the project on site clearance for Long Thanh airport which has just disbursed VND2,190,299 billion out of a total of VND18,195,035 billion, reaching 12.7%, due to problems in determining the origin of land, applying land price bracket for compensation and approving the construction unit price.

Some projects have problems in contract adjustment (Bach Mai 2 project, Viet Duc 2 project). Projects for foreign equipment procurement with LC opening only partially advance contracts, after the system is installed and tested, the acceptance and the payment are usually conducted in the last two quarters of the year, affecting disbursement of public investment capital in the first months of the year.

In particular, the implementation of ODA projects still faces many problems, such as unclear assignment of plans on the applicable financial mechanism (Secondary education development program project phase 2 under the Ministry of Education and Training; supporting program for sustainable energy development in rural, mountainous and island areas of Vietnam under the Ministry of Industry and Trade).

Some projects such as the tourism infrastructure development project to support comprehensive growth in the Greater Mekong Subregion of the Ministry of Culture, Sports and Tourism, and the Hoa Lac Hi-Tech park infrastructure development project are implementing the procedures to reduce capital to other projects, affecting the disbursement progress.

Immediately after understanding the specific problems from the grassroots level, the Ministry of Finance made many moves. In early August 2020, the Ministry of Finance sent documents to localities to guide the extension of the implementation and payment plan for additional investment capital from the central budget reserve in 2018 into 2020.

The following moves werethe document to remove problems related to disbursement of ODA projects from the mechanism of entry of revenues and expenditures into disbursement according to the domestic mechanism; and written notice on working results to be sent to localities. In addition, the Ministry of Finance also sent documents to localities, ministries and agencies to commit to the disbursement progress of ODA and foreign concessional loans, because the current progress is too slow and localities in the process of implementation are facing many difficulties.

Through inspections and working sessions, in addition to finding solutions to solving difficulties and problems, the Ministry of Finance also pointed out localities that are worthy of praise with good experiences that need replication. For example, Bac Kan, one of the most difficult localities in the country, had a relatively high disbursement rate of over 60%. The leader of Bac Kan said that in addition to saving recurrent spending 10% as required, the locality increased their savings by 2%. For projects after bidding, an additional 5% savings is required for developing new rural areas.

Strict sanctions required

Regarding solutions to continue speeding up the disbursement of public investment capital, at the recent online conference with ministries, agencies and localities nationwide on urging the disbursement of public investment capital in 2020, Minister Dinh Tien Dung has proposed to the Government and the Prime Minister a number of recommendations.

Accordingly, the Ministry of Finance proposed to allocate the year’s unpaid capital of VND22,000 billion as reported by the Ministry of Planning and Investment. For the capital source assigned to supplement the medium-term public investment plan of 10% of the central budget reserve and the VND10,000 billion for projects on the list of Resolution 797 / NQ-UBTVQH14 in the annual plan 2020, due to late allocation, it will take time to implement the projects.

The Ministry of Finance has also proposed the Prime Minister to assign the Ministry of Planning and Investment to synthesize and report to the Government for permission not to apply the regulations on capital reduction and adjustment according to Resolution 84 / NQ-CP.

“This is a problem for the localities. The slow capital allocated makes it difficult for the localitiesin implementation. There are localities which allocated capital on December 31, 2019 so they cannot disburse during this year,"said the Minister of Finance.

In addition, some localities have reported on forest protection and development projects implemented and paid according to the silviculture cycle, thus, by September 30, they cannot disburse 60% of the allocated capital plan. The provinces said that when the time for disbursement is over as prescribed (January 31, 2021) it is possible to disburse all the assigned capital plan in 2020 and recommended not to apply the capital adjustment (if by September 30, the disbursement of 60% is not completed) for forest protection and development projects. Therefore, the Ministry of Finance submits it to the Prime Minister for consideration and decision.

For ministries, central and local agencies, the Minister of Finance said that it is necessary to determine the acceleration of the disbursement of public investment capital as a political and key task in 2020 as stated by the Prime Minister and it is necessary to actively implement solutions synchronously and drastically. The adjustment and additional allocation of the medium-term investment plan of the central budget capital for the 2016-2020 period should be noted. Ministries, central and local agencies need to continue to deploy the assignment of annual public investment plan in 2020 for eligible projects otherwise they need to adjust the capital allocation plan.

In particular, to direct investors to complete the recovery of advance capital and pay outstanding debts forcapital construction of projects assigned by the plan in 2020; complete investment procedures for projects; carry out procedures for investment capital payment for projects within four days from the date that there is work volume accepted as prescribed.

At the same time, there are strict sanctions against investors, project owners, organizations and individuals that deliberately cause difficulties and hinder the progress of allocation, implementation and disbursement of the public investment capital plan; and regularly inspect, supervise and urge projects with slow disbursement. Finally, to review and assign capital plans for projects capable of disbursement in 2020 for capital plans supplemented by competent authorities as a basis for implementation.