COVID-19 not the sole reason for slow ODA disbursement

Hanoi, (VNA) – The year 2020 is the last year in implementing the medium-term plan on public investment disbursement for 2016-2020, but the sudden appearance of the COVID-19 pandemic with complex and unforeseeable developments has seriously impacted business and production activities across the country, including projects funded by Official Development Assistance (ODA) capital and concessional loans.

Statistics showed ministries, sectors and localities nationwide had disbursed only 21.64 percent of their assigned public investment capital as of the end of August. There has even been a trend of returning undisbursed ODA capital.

Asking to return 3.7 trillion VND of ODA capital

Eight ministries have submitted official documents asking to return a total of 3.7 trillion VND worth of ODA capital which they could not disbursed, equivalent to 32 percent of the amount assigned to them.

At a conference on the pace of disbursement of public investment capital funded by foreign loans in the first eight months of 2020 held on August 26, a representative from the Ministry of Culture, Sports and Tourism said the ministry was assigned 341 billion VND in 2020, and 95 billion VND was transferred from 2019 to this year. However, only 79 billion VND had been disbursed so far.

“With the current pace, we cannot disburse all assigned capital, so we have submitted a document asking to return 87 billion VND. If approved, the left capital will be 253 billion VND, and we pledge to disburse 100 percent of this amount, providing our projects are extended before September 15,” the representative said.

Among ministries assigned with the largest amounts of investment capital, the Defence Ministry said it faced many difficulties in disbursement. The ministry’s units had disbursed just 577 billion VND as of mid-July, while the total assigned capital was 2.024 trillion VND. The ministry expects to disburse about 1.517 trillion VND by the end of the year, or 75 percent.

A view of the conference on the pace of disbursement of public investment capital funded by foreign loans in the first eight months of 2020 (Photo: courtesy of the organiser)

The Ministry of Natural Resources and Environment and Ministry of Planning and Investment are no exception.

Many reasons for slow disbursement

Hoang Hai, Deputy Director of the Debt Management and External Finance under the Finance Ministry, told the press that there are many reasons for ministries and sectors to return assigned capital.

Generally speaking, projects using ODA loans or concessional loans are affected more seriously than domestically-funded ones, because most of their activities are linked to foreign countries, from the import of machinery and equipment, to contractors, consultants, supervisors, specialists and workers.

However, it is not the only reason. The projects are also hindered by many subjective factors such as procedures in adjusting matters associated to projects.

Deputy Minister of Finance Tran Xuan Ha chairs the conference (Photo: courtesy of the organiser) 

A report of the Finance Ministry said ministries and sectors had applied for adjusting the duration of nine loan agreements this year. The extension or adjustment of projects is always associated with adjusting the investment intention, which is complicated and time consuming. When the adjustment of investment intention is not completed, the adjustment of capital assignment cannot be made.

Another reason is that ministries and sectors also have to disburse unused capital in 2019 that has been transferred to 2020.

Specific commitments required

Deputy Minister of Finance Tran Xuan Ha told the conference that ministers and heads of ministerial-level agencies must consider the disbursement of public investment a political task and make commitment to complete 100 percent of the assigned plans. In case the goal cannot be reached, ministries, sectors and localities must specify the rate of disbursement that they expect to achieve, and explain why they cannot fulfill the plans.

He called for coordination among all relevant parties thoroughly deal with the obstacles, adding that his ministry will discuss problems arising during disbursement with lenders./.