Thursday, October 17 2019

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ODA disbursement needs urgent acceleration

Update: September, 14/2019 - 08:46

 

Parts of Hanoi's metro lines have been funded by ODA. VNA/ VNS Photo

HÀ NỘI Việt Nam disbursed only 10 per cent of its annual official development assistance (ODA) disbursement target in the first eight months of the year, according to a Ministry of Finance report.

At an online meeting held yesterday in Hà Nội on accelerating ODA disbursement in 2019, Minister of Finance Đinh Tiến Dũng said ODA disbursement in the first eight months of the year was just VNĐ6 trillion ($258 million), while the annual target is VNĐ60 trillion ($2.5 billion).

Regarding public investment, the disbursement result was VNĐ6.2 trillion, only 37 per cent of the National Assembly’s target.

The disbursement rates of provinces and cities were also very low, Dũng said, with some being at from 0.5 percent to 4.8 per cent of their target.

Dũng said the tardiness came from problems in the allocation of medium-term public investment plans, which are slow and insufficient compared to demand; capital allocation is not close to reality; slow adjustment of plans, lengthy procedures; slow completion of investment procedures, and obstacles in site clearance.

He also said Việt Nam's ODA disbursement rate had been declining since 2014, and is currently very slow: the disbursement rate in 2018 reached 11.2 per cent, or half of the rate in 2011-2014.

Previously, in August, Prime Minister Nguyễn Xuân Phúc asked localities and ministries to accelerate ODA disbursement. The PM also ordered strict punishment and discipline on individuals and organisations who violate regulations and hinder the disbursement process.

Slow disbursement projects

Slow ODA disbursement projects in Hà Nội include the flyover bridge at the Hoàng Quốc Việt – Nguyễn Văn Huyên intersection, the tunnel road at Giải Phóng Street and Ringroad 2.5. These projects are pending due to slow investment procedures.

In HCM City, the Bến Lức – Long Thành Expressway is also lagging behind. Officials from the city say the reasons for the delay were the lack of counterpart funds.

The HCM City environment wastewater treatment project, costing more than VNĐ11 trillion ($474 million), is also stuck due to a lack of funding. The project is registered for ODA spending in 2019 of VNĐ1 trillion, but by June only VNĐ99 billion had been disbursed.

The slow disbursement progress resulted in debts with contractors and many parts of the projects being implemented slowly. The project is now four years behind schedule.

In 2019, HCM City requested an ODA allocation of VNĐ5.4 trillion – but the disbursement amount by June was only VNĐ99 billion.

Experts and officials say slow disbursement will incur costs, such as the Government having to pay higher commitment fees, delays in completion and disputes with contractors.

Solutions

Trần Quang Thắng - Director of the Institute of Management and Economics (IEM) said most ODA had to go through central management and redistribution, resulting in tardiness in many cases. This could be convenient for State management but was neither flexible or effective, he said.

He proposed giving localities, especially major cities, some autonomy in dealing with ODA.

Cấn Văn Lực - chief economist of the Bank for Investment and Development of Việt Nam (BIDV) - said the slow disbursement of public investment had many consequences, affecting economic growth and pulling back other reciprocal capital flows from private and foreign partners.

In the end, businesses and investors have to bear the ballooning costs, which lead to jobs cut, increasing debts and a loss of credibility.

The key solution to clog the bottlenecks of slow disbursement is to clarify the responsibilities of relevant people at ministries, sectors and localities in each stage. The Government should consider this an indicator of fulfilling the tasks of individuals, ministries, sectors and localities.

To accelerate the disbursement of ODA, Ngô Văn Quý, Vice Chairman of Hà Nội People's Committee, proposed the Government allow Hà Nội to disburse ODA projects in accordance with projects' progress and foreign donors’ fund allocation. — VNS

 

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