Two economic engines slow to disburse foreign loans due to Covid-19

VCN- At a conference to review and promote the disbursement of public investment capital from foreign loans in 2020 held on June 25, localities said the main reason for the slow disbursement in the first six months of the year was due to the effect of the Covid-19 pandemic and some problems in capital adjustment procedures.
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Mr. Nguyen Doan Toan- Vice Chairman of Ha Noi City People's Committee gives a statement at the conference

Vice Chairman of Ha Noi City People's Committee

In 2020, the Prime Minister assigned an investment expenditure plan to Ha Noi City of 40,671.4 billion, with foreign capital (allocated ODA capital) at VND 3,299.5 billion. Over the last five months, the city has adjusted and added to the first capital plan, and the total expenditure for development investment is VND 44,918 billion.

By then end of May, the city disbursed VND 8,121 billion, 18.1% of the goal.

In 2020, the capital allocated to the ODA projects VND 6,982 billion, of which, the capital allocated in 2020 VND 5,971.25 billion; and the capital allocated in 2019 transited to 2020 VND 1,010.8 billion.

By the end of June, the allocated capital in 2020 was estimated at VND 1,886.6 billion, 31.6% of the plan, of which, disbursed ODA capital is VND 1,553.6 billion, reaching 29.7% of the plan (ODA capital allocated to projects is VND 1,193.6 billion, hitting 36.2% of the plan, re-lent ODA capital is 360 VND billion, reaching 18.6% of the goal).

The disbursed capital in 2020 is 24.1% of the goal and the disbursed capital in 2019 transited to 2020 reaches 24.2% of the plan.

To promote disbursement of public investment capital, including ODA capital, the city has deployed solutions from the beginning of the year, including assigning the development investment plans since the beginning of December 2019 according to provisions of the Budget Law and the Law on Public Investment, reviewing policies and mechanisms.

In the process of implementing ODA projects, the city has faced some problems. The Urban Railway Construction Project (Nam Thang Long -Tran Hung Dao Section (Line 2) has problems in terms of the adjustment procedures of the project’s total investment capital and the planning of the underground metro station near Hoan Kiem Lake, so the bid packages on construction and installation have not been implemented. The ODA capital for this project cannot be disbursed.

The Ha Noi Metro Rail System Project (Nhon – Ha Noi Station Section) still has problems about the advance procedures for the bid package No.9, the ticket system. Because the agreement on additional loan of 20 million euro with the French government has not been signed, the re-lend contract has not been signed.

The Yen Xa wastewater treatment plant project still has problems in terms of the additional capital of the consulting contract due to the implementation of procedures for re-bidding of the bidding package No. 3.

Two vocational school projects under the project "Strengthening vocational education sector" using ODA loans from the Japanese government have not been disbursed in 2020 due to difficulties in procedures for re-lending contracts.

Ha Noi proposes the Ministry of Construction and Ministry of Finance soon complete legal provisions so the projects can complete documents and procedures for implementation.

Pham Hong Ha- Director of Ho Chi Minh City Finance Department

Currently, HCM City has deployed nine projects using foreign loans. The total investment capital of these projects is VND 122,567 billion, of which ODA capital is VND 102,732 billion and counterpart fund is VND 19,835 billion. The projects focus on infrastructure development, flood prevention and environmental improvement.

As of June, disbursed ODA capital hit 1,601 billion VND, accounting for 10.31% of the goal. This rate is lower than the rate of public investment capital.

The main reason is that Ho Chi Minh City is proposing the Prime Minister allow adjusting the project implementation time, appraising adjustment of the basic design to make the project adjustment procedures.

The new projects of Metro Line 1 and Metro Line 2 have been approved for adjusting the contractor selection plan, so these projects are in the bidding process and some bidding packages have been cancelled and rebidded. Because the time for project implementation has been prolonged, it requires negotiation of signed contracts to adjust them to be consistent with reality.

Notably, due to the Covid-19 pandemic, procedures for foreign experts to work in HCM City have not been completed, especially for short-term bidding packages that require European and Japanese experts

HCM City expects to disburse re-lend ODA capital of 53.76% of the plan by the end of July.

HCM City proposes the Ministry of Finance continue supporting the mobilisation of ODA capital and concessional loans of donors, giving priorities to large-scale investment projects in infrastructure development, transport and environment; advises authorities to decide on the total annual loan and budget deficit for development investment in accordance with the actual situation of ODA projects and disbursement progress committed with donors.

By Hong Van/Ngoc Loan

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