ODA funds prioritized for urban infrastructure, environment

The Government will prioritize the allocation of ODA and preferential funds for HCMC to develop urban infrastructure and environment projects, as per a decree on a number of specific financial mechanisms for the city.

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The Metro Line No. 1 is under construction 

The allocation of investment capital for projects financed by ODA and preferential sources in HCMC shall follow the principle: for those projects payable from the city’s own budget, the Government lends the city and the city prepares reciprocal capital from its budget to pay principal and interests on time.

For some important projects of a large scale in the fields of environment, transport and irrigation, which exceed the capacity of the municipal budget, the HCMC government shall propose the Ministry of Planning and Investment and the Ministry of Finance for supports from the central budget, says the decree signed by the Prime Minister to be effective from June 10.

In a report to the planning ministry and the finance ministry late this March, the HCMC government pinpointed the difficulties and obstacles in the implementation of the public investment plan, including those related to mechanisms, legal framework and ODA disbursement.

Some key ODA projects of the city are making a very good progress and have been waiting for payments from the HCMC State Treasury, the municipal government remarked. 

However, the current pause in disbursement from the State Treasury is not in accordance with the provisions of the signed international contracts and Vietnam’s regulations on contract management, likely to cause complaints, fines and interest due to late payments.

To speed up the disbursement of ODA capital and minimize the complaints from contractors, the city has sent many petitions to the Prime Minister, the planning ministry and the finance ministry, looking for additional ODA funds in 2016. However, by the end of this March, their efforts had not been fruitful.

ODA capital allocation from the central budget in the medium term from 2016 to 2020, according to the Ministry of Planning and Investment, is set at VND13.5 trillion. 

The amount projected for 2017 is some VND4.03 trillion, which is yet to be paid out, making it impossible to meet the disbursement progress as committed to donors.

To meet the capital needs of ODA-funded projects, promote the efficiency of the use of the State budget capital and avoid international complaints, the HCMC government has proposed the planning ministry and the finance ministry approve the medium-term ODA grant of about VND48.7 trillion for the city in 2016-2020 andVND8 trillion in 2017 alone.

The timely allocation of ODA capital has become more urgent as recent information shows that the Metro Line No. 1 (Ben Thanh-Suoi Tien) in HCMC, an ODA-funded project, is at risk of further delays.

Earlier, on April 27, at a meeting on the socio-economic situation of HCMC, Le Nguyen Minh Quang, head of the HCMC Management Board of Urban Railway Projects, reported the city needed an estimated VND5.2 trillion for the development of the Metro Line No. 1. However, the ODA capital allocation planned by the Ministry of Planning and Investment was only VND2.9 trillion.

In September 2016, the Ministry of Finance asked the State Treasury to stop further payments to the contractors of the Metro Line No. 1. Therefore, before the Lunar New Year, the city had to advance nearly VND1 trillion to the contractors.

By April 26, HCMC had still owed the contractors nearly VND1.34 trillion.

At present, the city is monitoring 20 ongoing projects using ODA capital with a total investment of around VND114.24 trillion, of which ODA funds account for some VND97.8 trillion and reciprocal capital about VND16.44 trillion.


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