ODA disbursement alarmingly slow: Finance Ministry

June 26, 2019 | 07:57 pm PT
ODA disbursement alarmingly slow: Finance Ministry
Parts of Hanoi's metro lines have been funded by ODA. Photo by VnExpress.
Vietnam’s disbursement of official development assistance is yet to reach half of the amount planned for 2016-2020, says the Ministry of Finance.

According to the National Assembly’s medium-term public investment plan, Vietnam should disburse VND360 trillion ($15.43 billion) of ODA and other concessional loans received between 2016 and 2020. However, as of May 2019, it had only disbursed VND133 trillion ($5.7 billion). This means Vietnam has only spent 37 percent of the ODA capital it has been given for the four-year period.

Truong Hung Long, head of the Ministry of Finance’s Debt Management Department, said at a conference on Wednesday that ministries and localities have been slow to report their capital disbursement plans for 2019, leading to slow allocation of capital in some localities.

These are major concerns for contractors and sponsors, Long said. Currently, there are 60 projects in Vietnam which have not been allocated their planned capital, with total shortfall estimated at over VND34 trillion ($1.46 billion), he added.

Eric Sidgwick, country director for the Asian Development Bank (ADB), said Vietnam’s average disbursement rate is much lower than other recipients of ADB funding.

Red tape is one of the main causes of this situation, he said. Even minor changes in projects such as increases in scale, 6-month loan extensions, cost structure changes, or the use of contingency funds have to get investment policy approval. In the meantime, activities and payments are suspended.

Sidgwick also warned that slow disbursement will incur costs, such as the government having to pay higher commitment fees, delays in completion and disputes with contractors, affecting Vietnam's reputation.

Local leaders who attended the conference also cited specific projects facing capital shortages. For instance, representatives of Ho Chi Minh City said that in 2019, they had requested disbursement of nearly VND11.5 trillion ($492.8 million) for five projects, but was only granted VND199 billion ($8.53 million) for three projects by the Ministry of Planning and Investment.

A similar issue was mentioned by Hanoi officials who said the capital city was only allocated VND310 billion ($13.28 million) of the VND1 trillion ($42.85 million) requested for ODA projects.

In 2018, total ODA committed to Vietnam from six international development banks reached $28.9 billion; the pending disbursement amounted to $16.9 billion.

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