Vietnam’s Ministry of Finance (MoF) is set to disclose periodically data regarding the disbursement rate of official development assitance (ODA) on its website where it will name three ministries and 10 provinces/cities with the lowest disbursement rates, starting October 15.
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The MoF requested three ministries and 10 provinces/cities with the lowest ODA disbursement rates to provide explanation and solutions to boost disbursement.
Starting October 15, the MoF is scheduled to disclose the disbursement data on a 15-day basis on its website: http://mof.gov.vn. The data, along with detailed assessment of the MoF, would later be submitted to Prime Minister Nguyen Xuan Phuc for consideration and instruction.
The disbursement rate of ODA and foreign soft loans as of August 31 stood at VND6.48 trillion (US$279.32 million), or 10.7% of the target set by the National Assembly.
Disbursement of public funds also faced similar situation, as in the first nine months of 2019, the disbursed amount reached VND192.13 trillion (US$8.28 billion), lower than the figure recorded in the same period last year, equivalent to 45.17% of the target set by the National Assembly and 49.19% of that of the Prime Minister, according to MoF data.
Upon breaking down, there were seven ministries and 14 provinces with disbursement rate of over 70%, including four ministries and four provinces/cities with over 80%. However, the majority of government agencies have reported slower disbursement than average, in which 31 ministries/government agencies and 19 provinces/cities with disbursement rates of below 50%, 17 ministries/government agencies and one province with rate below 30%.
Truong Hung Long, director of the Department of Debt Management and External Finance, previously said part of the reason for slow disbursement was the delay in making public investment plan of 2019, while the Ministry of Planning and Investment (MPI) has only allocated 48% of the total fund to provinces and cities.
The insufficiency of fund allocation and slow implementation of projects have been the main concern for project owners and donors, Long added.
Meanwhile, Vice Minister of Finance Tran Xuan Ha said it is necessary to revise the legal framework. As the new Public Investment Law will come into effect, Ha said a new regulation on ODA management with simplified process is essential.
Low disbursement could lead to additional costs and higher commitment fees for the government, which are charged by a lender to a borrower for an unused credit line or undisbursed loan.
More importantly, there could be potential contract dispute between project owners and contractors, affecting Vietnam’s credibility.
