Slow disbursement of public investment capital, difficult to stimulate economic demand

It is necessary to focus on disbursing the fastest, most effective and maximum amount to stimulate economic demand. Photo: Thuy Linh

Many influencing factors

The Government's Resolution 63/NQ-CP on the main tasks and solutions to promote economic growth, disbursement of public investment and sustainable exports in the last months of 2021 and the beginning of 2022 sets out the following objectives: By the end of 2021, the disbursement rate must reach 95-100%. However, by the end of November, the disbursement rate of the whole country was estimated at 63.86% of the plan assigned by the Prime Minister (equivalent to over VND294,589 billion), lower than the same period in 2020 (71.22%).

Notably, there are some localities where the disbursement rate of investment capital is still quite low and it is difficult to complete the annual estimate. As in six localities: Quang Binh, Quang Tri, An Giang, Dong Thap, Bac Lieu, Ca Mau, in 2021, the total public investment capital allocated by the state budget to these localities is VND24,048,659 billion.

However, as of November 30, 2021, only VND11,749 billion has been disbursed, reaching 48.9% of the plan and much lower than the national average.

Recently, the 5th Working Group on inspecting, urging, removing difficulties and accelerating the disbursement of public investment capital in 2021 of the Government led by Minister of Finance Ho Duc Phuoc had a working session with these localities.

At the meeting, Mr. Le Van Phuoc, Vice Chairman of An Giang Provincial People's Committee, said that by the end of November 2021, the disbursement rate of the province reached 33.6%. The main reason is that An Giang is a border province. In the first six months of the year, the Covid-19 pandemic in Cambodia meant the province had to focus on ensuring safety of the border. After that, the 4th outbreak of the pandemic across the country forced An Giang to implement social distancing, greatly affecting the mobilization of workers, construction work had to stop completely.

Mr. Pham Thien Nghia, Chairman of Dong Thap Province People's Committee said, by the end of November 30, 2021, this province had disbursed VND2,083 billion, reaching more than 44% of the plan although the province had many guiding documents and organized many meetings to discuss solutions, including establishing inspection teams for key projects, transferring capital from low-disbursed projects to high-performance projects.

Mr. Le Van Su, Vice Chairman of Ca Mau Provincial People's Committee, also said that in the list of projects to be implemented in 2021, up to 50% of new projects will be implemented.

These projects in the first quarter of this year are in the stage of preparing documents and steps for investment. There are even projects that the preparation stage will last until the second quarter of 2021. In addition, like other provinces, Ca Mau has many important projects with large capital that face difficulties in site clearance or adjustments that take a long time. In particular, ODA projects also face many difficulties in coordination and implementation.

Public investment capital must be opening

Public investment is one of the important resources for socio-economic development and is the driving force for the economy to overcome difficulties caused by the Covid-19 pandemic.

Commenting on the disbursement of public investment capital, Minister of Finance Ho Duc Phuc said that, in the current context, it is necessary to define public investment capital as a primer because if we spend 1 dong of capital, the association will spend VND10 to stimulate economic demand, create jobs, and develop sustainably.

According to the minister, in 2020, there was also the effect of the Covid-19 pandemic, but the disbursement rate for public investment still reached 98% of the plan. This year, the pandemic is more intense and lasts longer, but it is still necessary to strive to achieve the goal that resolution 63/2021/NQ-CP has issued.

"The leaders of the provinces need to make efforts from the provincial level to the district level to remove difficulties, focus on speeding up construction in accordance with regulations, and master their authority to adjust the project soon. The six localities are poor provinces, they are completely based on the state budget subsidies without ensuring the balance of revenue and expenditure, therefore, capital sources must be higher to stimulate economic demand, create jobs, and develop rapid and sustainable socio-economic development," said Minister Ho Duc Phuc.

Due to difficulties in the disbursement process, many provinces have requested to transfer capital and allow the capital to be extended until 2022. However, when discussing this issue, leaders of the Ministry of Finance thought that it was necessary to consider whether to prolong it or not because it will affect the fiscal policy while the country is still facing difficulties and people have no jobs. Moreover, when we are still discussing the economic stimulus package, the disbursement of public investment is proposed to be extended, this package will not make sense. Therefore, it is necessary to focus on disbursing the fastest, most effective and maximum disbursement to stimulate economic demand.

As for the rising price of construction materials, the minister said that provinces need to report promptly and in detail on the time and price of each type of material, how long it will increase to propose solutions. On that basis, the Ministry of Construction will advise the Government and the Prime Minister. The land price in site clearance has been decentralized to local authorities, so when clearing the site, the compensation will be made according to the land price list prescribed by the Provincial People's Council.

On the side of the Ministry of Finance, the Minister of Finance affirmed that he will solve the problems of capital sources for disbursement, and guide the procedures within his functions and duties.

The standing group is also always ready to remove difficulties and obstacles for the provinces in disbursing public investment capital. With local problems, the Ministry of Finance will advise the Government to have the document as soon as possible. However, the minister also asked local leaders to study the issues under the authority of the Provincial People's Committee for early resolution.