Vietnam signed nine agreements on ODA loans and preferential loans with foreign donors with a total value of 933.4 million USD in 2021, including up to four loan agreements totaling 727.7 million USD with the World Bank, accounting for 78% of the total value signed in the year.
Notably, the disbursement of this source of foreign capital in 2021 was very slow.
Accumulated disbursement of public investment (foreign capital) by the end of January 31, 2022 was 16,986 billion VND, equivalent to 32.95% of the 2021 plan, including 6,680,519 billion VND by ministries and state agencies, representing 39.77% of the plan, and 10,306,194 billion VND by local governments, reaching 29.66% of the yearly plan.
According to the Ministry of Finance, by the end of January 31, 2022, seven ministries and 34 provinces fulfilled over 35% of the assigned disbursement plan of 2021. Four out of 14 ministries (Ministry of Industry and Trade, Ministry of Health, Hanoi National University, Vietnam National University Ho Chi Minh City) and 5 out of 63 provinces (Bac Ninh, Hai Duong, Nam Dinh, Dong Nai, Ba Ria – Vung Tau) did not disburse foreign capital under the 2021 plan.
“With the above disbursement rate of 32.95%, it can be confirmed that the disbursement of foreign public investment capital in 2021 did not meet the plan, as well as the expected disbursement rate to be achieved in 2021 for public investment in general according to the Resolutions of the 2nd session of the 15th National Assembly (90% of the estimate)”, the Ministry of Finance assessed.
Many localities did not disburse any USD of foreign loans.
Slow disbursement of public investment
The Ministry of Planning and Investment will submit to the Prime Minister a plan on extending the disbursement time for the 2021 plan of foreign capital disbursement for a number of projects implemented by ministries, agencies and provinces. If it is approved, disbursement of foreign capital for these will be done in 2022.
The Ministry of Finance explained the reasons for the slow disbursement of foreign capital in 2021: the Covid-19 pandemic was complicated, making it difficult for the supply of materials, labor, importing equipment and visits of foreign experts; collection from foreign donors was prolonged, while the signing and payment mechanism for many projects using ODA and concessional loans must have no from the donor; the prices of some goods, raw materials (especially steel) on the market fluctuated strongly, affecting the progress of construction and installation contracts.
In addition, the investment-managing agency was slow to implement pre-investment work (site clearance, resettlement, basic design, bidding, signing contracts…).
To promote disbursement of foreign capital in 2022, the Ministry of Finance proposed that ministries, agencies, localities and project developers are responsible for urgently completing procedures for investment, construction, relocation and resettlement, and site clearance for project implementation.
The Ministry of Finance also proposed that donors review and reduce unnecessary approval procedures, and speed up the approval time for issues requiring the donor’s no objection. For projects that are in the stage of hiring consultants to set up the total investment, it is necessary to have solutions to monitor the quality and progress of the consultants, to avoid problems and delays, affecting project implementation.
On April 15, 2022, the Government Office issued a written request to review the responsibility for delayed disbursement of the 2021 public investment plan.
Yet, the disbursement of foreign loans in 2022 is still very slow. According to a report of the Ministry of Finance, the disbursement of ODA from the central budget by March 31, 2022 only reached 0.99% of the plan assigned by the Prime Minister.
On April 8, 2022, Deputy Prime Minister Pham Binh Minh signed Official Dispatch No. 307/CD-TTg requesting ministries, agencies and localities to speed up the implementation and disbursement of ODA and concessional loans. The Government considers the disbursement of ODA as one of the key political tasks of 2022 and following years.