ODA projects scrutinized for optimal investment efficiency
Updated at Saturday, 05 May 2018, 13:58
The Hanoitimes - Deputy Prime Minister Pham Binh Minh instructed relevant authorities to scrutinize approved projects using foreign loans in a move to optimize the capital source.
The Deputy PM said during a recent meeting to review and accelerate the launch of 26 projects using loans from the World Bank (WB) and Asian Development Bank (ADB) for 2017-2018, which were not listed in the mid-term public investment plan.
Representatives of the ministries of finance, planning and investment, health, industry and trade, agriculture and rural development, and natural resources and environment, as well as the Government Office, and the State Bank of Vietnam joined the meeting.
Urban development is among projects that use ODA loans
The projects are primarily focused in the fields of infrastructure building, education improvement, urban and new rural development, grassroots-level healthcare network expansion, and water supply for drought-hit provinces.
As of July last year, Vietnam graduated from the International Development Association (IDA), meaning that the country will no longer be provided with preferential loans from the IDA.
Vietnam this year will only have access to loans with higher interest rates from the International Bank for Reconstruction and Development (IBRD), and non-preferential IDA loans.
The World Bank now requires that its business loans must be guaranteed by the Government, while the Vietnamese Government cannot offer guarantees for foreign loans for businesses, according to current regulations.
Speaking at the meeting, Deputy PM Minh, who is also head of the National Steering Committee for Official Development Assistance and Preferential Loans gave directions for each project.
The Ministry of Planning and Investment was required to make a list of approved projects using foreign loans that are absent from the medium-term public investment plan, thus ensuring that the loans are fully tapped.
Besides, the ministry was required to report to the Government on orientations to mobilize loans in the future, especially non-preferential loans.
The State Bank of Vietnam was assigned to collect opinions of ministries, agencies and localities about projects to submit to authorities concerned.
Statistics released at a recent seminar on official development assistance (ODA) loans showed that Vietnam has signed agreements to borrow more than US$80 billion in ODA loans since 1993 but only $56.7 billion has been disbursed as complicated and overlapping procedures have hindered ODA projects.
Nguyen Van Hieu, Deputy Minister of Planning and Investment, said the current way of ODA management is no longer suitable to the Vietnamese Law on Public Investment and policies of international donors as Vietnam has become a middle-income country.
Ha Hai An, deputy director of the International Cooperation Department of the State Bank of Vietnam, pointed the finger at limitations on ODA loan-related regulations. In 2011-2016, the country issued and amended such regulations but they remain overlapping, hindering the implementation of projects.
For example, in accordance with the 2013 Constitution, international agreements will be considered and approved by the State President instead of the Government. As such, one more step is added in the ODA approval process, thus prolonging the time required for negotiations and agreement signing.
In addition, the 2014 Law on Public Investment consisting of new regulations on investment decision jurisdiction leads to contradictions in the implementation of projects in the 2011-2016 period.
At the seminar, experts proposed issuing the law on ODA capital management and appointing an agency to manage such capital so that the capital will be used effectively.
Given overlapping and complicated procedures, Dinh Son Hung, former deputy director of the Ho Chi Minh City Institute for Development Studies, suggested Vietnam should fine-tune regulations and mechanisms to promote the disbursement of ODA capital.