ODA projects repeatedly delayed by slow capital disbursement

As of August, the Ministry of Education and Training had only disbursed 25 percent of the official development assistance (ODA) disbursement plan despite receiving the entire amount.

It is unable to disburse ODA funds on time because counterpart funds have not yet been set up to convert foreign capital into local currency, forcing projects to wait for funds every few months, Dung said at a conference on Friday.

Ministries and localities should learn from their mistakes and research ways to ensure timely supply of counterpart funds. When drawing up and evaluating projects, every agency commits to finishing them on time, and then invariably run into stumbling blocks, he added.

As of the end of August, Vietnam had disbursed an estimated VND6.48 trillion ($281 million) in ODA and foreign concessional loans, only 10 percent of the VND60 trillion ($2.6 billion) set out in the National Assembly’s plan.

The disbursement progress had been even slower in the first six months of this year, having reached only 3.4 percent of the plan then. This is mainly because of difficulties faced in capital assignment and lengthy procedures, Minister Dung noted.

At the meeting, Vice Chairman of the Hanoi People’s Committee Ngo Van Quy asked the Ministry of Planning and Investment to report on the city’s six ODA projects, of which four were seeing very low levels of disbursement.

For instance, Hanoi's Nhon-Hanoi Railway Station metro section was to receive VND3.27 trillion ($142 million) this year, but has only received 34 percent of the amount by the end of August, Quy said. 

The second metro line of the city will run 12.5 kilometers from the Nhon area in the western district of Nam Tu Liem via Kim Ma Street to Hanoi Railway Station on Le Duan Street.

Eric Sidgwick, country director for the Asian Development Bank (ADB), aid at a forum in June that Vietnam’s average disbursement rate was much lower than other recipients of ADB funding.

Red tape was one of the main causes for this situation, he said. Even minor changes in projects, like increases in scale, six-month loan extensions, cost structure changes, or the use of contingency funds had to get investment policy approval, and in the meantime, project activities and payments were suspended, Sidgwick noted.

Last year, the country only met 53.65 percent of its disbursement target, a report by the National Assembly's Finance and Budget Committee said.