On May 21, the Ministry of Finance held a conference on disbursement of public investment capital from foreign sources in the first months of 2024 and measures to increase disbursement in 2024.
Low disbursement rate
Speaking at the Conference, Mr. Vo Huu Hien - Deputy Director of the Department of Debt Management and External Finance (Ministry of Finance) said that completing the disbursement of the public investment capital plan in 2024 is an important task, contributing to promoting socio-economic growth.
To speed up the disbursement of public investment capital in 2024, recently, Minister Ho Duc Phoc has directed the entire financial sector to synchronously implement measures, including foreign loans such as: Sending official dispatches to ministries, central and local agencies requesting urgent implementation of detailed allocation of public investment capital plans from the state budget, foreign capital plans in 2024, and entering estimates on the Treasury and Budget Management Information System (TABMIS).
At the same time, the Ministry of Finance organized working delegations with 2 ministries (Ministry of Transport, Ministry of Agriculture and Rural Development) and 3 localities (Thanh Hoa, Hue and Dak Lak) to grasp the disbursement situation and handle problems related to disbursement and payment procedures, issues affecting the progress of project implementation; review the process of receiving documents and processing withdrawal applications to ensure the shortest time (maximum 1 working day for direct payment applications) and return immediately to project owners if the documents are not valid; discuss and work with donors to speed up the negotiation, signing and validity of loan agreements for projects that have completed investment procedures...
However, the results of foreign capital disbursement in the first 5 months of 2024 (as of May 15, 2024) of localities are still quite low.
In 2024, localities are assigned a total capital plan of VND 24,172.86 billion, of which public investment capital is VND 9,456.86 billion (53/63 localities), re-borrowed capital is VND 14,716 billion (51/63 localities). As of May 15, 2024, the proportion of capital plans that localities have allocated and imported Tabmis for projects for public investment capital from the central budget (NSTW) is 91.7% of the assigned capital plan, re-borrowed capital is 84.2% of the assigned capital plan. The cumulative disbursement of foreign capital by localities as of May 15, 2024 is 5.7% of the assigned capital plan (including both allocated and re-borrowed capital plans), 4.9% higher than the same period in 2023. Only 5/53 localities have a disbursement rate of over 15%, 28/53 localities have not disbursed additional targeted central government capital allocated to local budgets.
'Roll call' of problems in disbursement
At the Conference, ministries and branches discussed and identified the reasons for slow disbursement, including some main reasons such as: slow site clearance, slow bidding, technical design; projects must carry out procedures to adjust investment policies, adjust projects, loan agreements; slow receipt of donors' non-objection to documents...
In addition, in the first months of the year, a number of ministries and branches are still focusing on disbursing the extended 2023 capital plan. According to Mr. Nguyen Thanh Tuan - Director of the World Bank Project Management Board (Hanoi National University), this unit has currently allocated and imported the foreign public investment capital estimate for 2024 into TABMIS; the unit (World Bank Project Management Board) has received foreign public investment capital for 2024 on public services of more than 645 billion VND.
In the process of using this source of capital, Hanoi National University is facing some difficulties. Specifically, according to the request from the Sponsor, some of the following activities need to get "No Objection - NOL" opinions from the Sponsor before implementation such as: Project Master Plan, Annual Plan, Project Operation Manual, Bidding Plan for packages using foreign loans, Task Outline for bidding consultants, Bidding Documents and Contractor Selection Results before signing the contract for pre-review packages. Accordingly, the implementation time of these tasks is often prolonged due to the need to continuously update and adjust before the Sponsor sends a "No Objection" letter to the units.
In addition, payment is also difficult because the project uses different sources of capital. This makes payment control take a lot of time because payment documents are appraised and controlled at the State Treasury and the Ministry of Finance before being sent to the Sponsor for payment to the contractor...
Mr. Nguyen Anh Dung - Deputy Director of the Department of Planning and Investment (Ministry of Transport) also shared that this Ministry currently has the largest amount of ODA capital when it was assigned 4,366 billion VND in capital in 2024. The biggest difficulty affecting the disbursement process is related to the issue of site clearance. Typically, the project connecting traffic in the northern mountainous provinces is stuck because it passes through a forested area, and the forest conversion procedure takes up to 1.5 years. Therefore, site clearance costs often increase by a significant amount.
Similarly, the Ministry of Education and Training, in the first 6 months of the year, almost failed to disburse ODA capital, because this Ministry was the most "stuck" in project appraisal, had difficulty in finding appraisal units... Therefore, this Ministry plans to strive to disburse 350 billion VND for the whole year, and will return the remaining 280 billion to the budget.
Through the process of working with localities, projects and monitoring the disbursement data of projects, the Ministry of Finance has found problems. Firstly, problems in adjusting investment policies, adjusting projects, extending disbursement, extending implementation time, and using surplus capital. The main reason why projects have to request extensions of implementation time and disbursement time is because project implementation is slow and problems that have not been promptly resolved. There are problems that arise in Group B projects after localities complete the procedures for extending project disbursement (under the authority of the Provincial People's Council), they must carry out procedures for extending capital arrangement time (under the authority of Government leaders).
Second, the difficulties in implementation and disbursement of this group of difficulties are quite diverse, including: Difficulties in bidding or commercial contracts; difficulties in site clearance; difficulties due to design adjustments; delays in acceptance and payment. These are the difficulties under the responsibility of the Provincial People's Committee and project management boards.
Third, the problem is due to the lack of capital planning (both allocation and re-lending). In 2024, some localities were confused in making capital plans, could not predict the progress of project implementation and the amount of capital needed to be disbursed, so they made capital plans that were not close to reality, especially for projects with 2024 as the final disbursement year, leading to a lack or no capital plan for disbursement.
Propose some solutions to speed up disbursement progress
To strive to achieve a high disbursement rate for ODA capital and foreign preferential loans assigned by the Prime Minister in 2024, a number of solutions need to be implemented.
On the part of the Ministry of Finance, it is necessary to ensure the time for processing capital withdrawal applications is in accordance with regulations; organize delegations to directly work, urge, and remove difficulties and obstacles in public investment, focusing on large projects and localities assigned many capital plans; continue to discuss with donors to remove obstacles on the donor side such as shortening the time and simplifying procedures for giving non-objection opinions.
The Ministry of Planning and Investment needs to support localities in speeding up the progress and procedures in extending the capital allocation time to avoid affecting the project disbursement progress; provide clearer guidance to localities on the authority to approve project adjustments for projects implemented at many agencies.
On the local side, it is necessary to conduct detailed and specific reviews and assessments of the disbursement capacity of each project, paying special attention to projects whose planning year is the final disbursement year to ensure sufficient capital for the projects, avoiding the need to extend disbursement, extend implementation time, and generate many administrative procedures.
In cases where it is impossible to complete the project volume according to the set schedule and it is necessary to cut or transfer the assigned capital plan, a written proposal for cutting, reducing or transferring must be sent to the Ministry of Planning and Investment and the Ministry of Finance before June 30, 2024 for coordination.
For programs/projects requiring adjustment of investment policies, localities need to report and coordinate closely with the Ministry of Planning and Investment to submit to the Prime Minister for approval of investment adjustment policies. Based on the Prime Minister's approval/decision on investment policy adjustment, localities coordinate with the Ministry of Finance to adjust disbursement deadlines and adjust capital allocation according to signed loan agreements (if any).
For projects with difficulties in investment preparation and project implementation, localities and the Ministry of Finance believe that the Project Management Board is responsible for promptly completing procedures on investment, construction, resettlement, and site clearance to implement the project; completing technical designs, resolving difficulties and obstacles in contract bidding; promptly handling problems arising in each stage of project implementation.
Central project management boards of projects managed by ministries and branches need to provide guidance and training on professional skills and capacity for local project management boards to ensure that projects are implemented synchronously and effectively.
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