Disbursement continues to play catch-up

May 25, 2022 | 09:00
Disbursement of public investment and official development assistance remains slow compared to the plan assigned by the government while the speed of economic recovery greatly depends on public investment, with its efficiency expected to contribute to Vietnam’s rapid and sustainable growth.
Disbursement  continues to play catch-up
Transport infrastructure is a crucial part of the country’s medium-term funding plans, Le Toan

Data from the Ministry of Finance shows that the disbursement rate of official development assistance (ODA) and foreign preferential loans in the first four months of 2022 reached merely 4.39 per cent of the assigned plan.

“The slow disbursement of foreign capital affects socioeconomic development goals,” commented Minister of Finance Ho Duc Phoc in a dispatch to ministers and leaders of governmental agencies on May 6.

In the document, Phoc stated that the delay in the disbursement of foreign capital is the responsibility of ministries, sectors, and localities. He also quoted the prime minister’s direction in early April, asking ministries, sectors, and localities to accelerate the disbursement of public investment capital and consider this one of the political tasks to focus on this year.

Experts found that the disbursement rate of public investment capital and ODA reached just a low level in the first four months of the year, only 18.48 per cent compared to the same period in 2021, which may slow down the economic recovery as public funds are considered prime capital for growth recovery.

Prof. Dr. Hoang Van Cuong, member of the Committee on Finance and Budget of the National Assembly (NA), said, “If the situation continues like the past four months, it will be difficult to complete the disbursement plan for public investment in 2022.”

Cuong added, “The NA has corrected several points in the management of investment capital for ODA projects at its extraordinary session in early 2022, authorising ministries, sectors, and localities to adjust and remove obstacles in disbursement.”

The recovery of the economy depends on the government’s rapid and effective implementation of the country’s Programme on Socioeconomic Recovery and Development. GDP in the first quarter was estimated to have increased 5.03 per cent over the same period last year, higher than the growth of the first quarters of 2021 (4.72 per cent) and 2020 (3.66 per cent), but still lower than the 6.85 per cent in the same period of 2019.

Shortening the journey between the economic centres of the three northern mountainous provinces of Lai Chau, Lao Cai, and Yen Bai with other localities, as well as Hanoi, Hanoi-Lao Cai Expressway is supposed to improve the transport infrastructure’s efficiency. However, the expressway will likely not be completed on schedule in 2024 because progress is slower than the overall plan.

The transport project in the northern mountainous provinces is an important one for the transportation sector, deployed in the medium-term public investment plan (MTIP) for the 2021-2025 period, with the total investment amounting to $235 million, including ODA loans from the Asian Development Bank worth more than $187 million, the grant from the Australian government of nearly $4.5 million, and counterfunding of over $43 million from the Vietnamese government.

Deputy Minister of Transport Nguyen Ngoc Dong in March had a meeting about the implementation of the project in the northern mountainous provinces. He warned, “The project is behind the general progress and may have to extend its loan agreement if it does not accelerate the progress.”

Minister of Transport Nguyen Van The said that in 2022, his ministry (MoT) will be assigned the largest MTIP ever by the government, amounting to more than $2.17 billion with many large infrastructure projects such as the North-South Expressway.

The ministry’s public investment capital plan for 2021 was about $1.89 billion for the annual plan. By the end of January, about 96 per cent of the plan assigned by the prime minister were disbursed, the highest rate in the country.

According to The, the ministry is focusing on completing the entire North-South Expressway and deploying several connecting roads, especially ring roads, to major economic centres such as Hanoi and Ho Chi Minh City. It is expected that by the end of 2025, there will be about 3,858km of expressways.

Even if the MoT is preparing its projects well, the obstacles that slowed down the progress in the 2017-2020 period have not been solved yet.

“What is the nature of the delay? Directors of project management units must grasp the current situation, calculate the remaining time, and know how to deal with delayed bidding packages,” The said at the meeting on April 13.

The National Assembly has decided to allocate about $1.65 billion of capital in the medium-term investment plan from the state budget in the 2021-2025 period to fund the eastern cluster of the North-South Expressway.

The total amount of ODA and concessional loans of foreign donors expected to be arranged during 2021-2025 amounts to $22.9 billion, according to Decision No.2109/QD-TTg.

The disbursement rate of public investment capital in the first four months of 2022 only reached 18.48 per cent of the plan, a clear reduction compared to the same period in 2021. Of this, seven ministries and nine localities had disbursement rates of over 25 per cent, 71 localities had disbursement rates below 17 per cent, and 17 units had not yet disbursed anything, according to the Ministry of Planning and Investment.

By Nguyen Hoang

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