Disbursements for development remains extremely low, says ministry
Disbursements for development remains extremely low, says ministry
Vietnam disbursed nearly VND4.18 trillion (US$180 million) worth of official development assistance (ODA) loans in the first six months of this year, equivalent to merely 6.9% and 12.7%, respectively, of targets set by the National Assembly (NA) and the Government.
The Ministry of Planning and Investment said in a report that this level of ODA disbursements was lower than that from one year earlier.
Eight out of 59 localities had rates of disbursements at more than 30% of their commitments, while 28 other localities had yet to disburse their funds. Also, 11 ministries and central agencies disbursed less than 30% of their allocated loans.
The ministry said the slow pace of disbursements was caused by problems in a public investment plan for foreign loans. As of late June this year, the ministry allocated some 54% of the total fund to provinces and cities.
The slow allocation process was due to a shortage of reciprocal funds, leading to delays in allocating foreign loans, according to the ministry.
For example, the Ministry of Transport made a proposal to disburse only VND9.3 trillion (US$401 million) out of VND14.48 trillion (US$624 million) assigned by the NA.
Also, a number of projects have run out of their medium-term finances, which are now awaiting funding adjustments from authorities.
In addition, investment procedures among certain projects have yet to be completed, as their total investments are being revised up, or extensions of their loan agreements are being made.
Some projects could not make disbursements, due to obstacles to site clearance and resettlement, or because of adjustments to their investments.
Eric Sidgwick, Asian Development Bank Country Director for Vietnam, said at a conference late last month that even minor changes in projects, such as increases in scale, six-month loan extensions, cost structure changes or the use of contingency funds, require adjustments in investment principles, leading to temporary suspensions of activities and payments.
He also warned that slow disbursements could incur additional costs and higher commitment fees for the Government, which are charged by a lender to a borrower for unused credit lines or undisbursed loans.
Besides possible delays in project completions, there could be a potential contract dispute between project owners and contractors, affecting Vietnam’s credibility.
