Misspending thousands of billions of dong of government bond capital

The State Audit has just proposed to reduce and financially handle more than VND1,000 billion of government bond capital spent in violation of regulations in ministries, branches and localities.

The State Audit recently reported to the Prime Minister the audit results of the Special Topic on issuance, management and use of capital from bond issuance (TPCP) in 2014.

Figures show that this year, the Government mobilized about 248,000 billion VND (about 11 billion USD) from bonds. The total amount allocated afterwards was nearly 99,550 billion, of which more than 56,700 billion was spent on transportation, more than 17,300 billion on irrigation, the rest was spent on healthcare, resettlement, new rural construction... This capital source is assessed to have contributed positively to promoting socio-economic development and improving the quality of infrastructure nationwide.

However, the Audit pointed out many shortcomings and limitations in the management and use of loan capital, from the stages of building capital needs, allocating and adjusting plans, to the stages of disbursement, settlement and project management...

Many common issues were raised in the report such as capital construction exceeding the plan, determining inappropriate needs, many projects disbursed larger amounts of money than actual expenditure. Localities even built projects that were not on the list of projects eligible for using government capital, using this source to match ODA projects for the wrong subjects...

Transport projects often plan for larger capital differences than actual. Photo: VNA

This situation occurs in many localities and some ministries and branches... As some existing problems and limitations in planning and capital allocation work are pointed out in the report:

Regarding the use of allocated capital, many other issues were also raised by the audit, such as Dien Bien province purchasing equipment not in accordance with regulations, wasting 27 billion VND. The province also accepted and paid for incorrect volume and unit price in most of the projects audited in detail with a total amount of 510 billion VND.

Tien Giang province also arranged for the Cai Lay Town General Clinic project to exceed the total support capital by 167 billion VND. The road project to the center of Dinh An commune in Tra Vinh province also exceeded 151 billion VND.

The State Audit also pointed out many violations in the process of appraising, approving estimates and selecting contractors. The work of approving bid package prices, overlapping volumes, incorrect unit prices... led to inaccurate determination of winning bid prices. Many contractors who did not meet the capacity requirements still won the bid, leading to the project having to change contractors many times. Some contracts were signed in full, but the terms of the contract allowed for price adjustments...

Construction quality management and supervision also has many negative aspects such as accepting unfinished volume, substandard materials, errors in volume, unit price, etc.

With the above results, the State Audit discovered many errors and deducted about 510 billion VND, including incorrect volume (268 billion), incorrect unit price (79.3 billion)... By the end of 2015, the outstanding debt for basic construction from the Government's budget capital source was 5,052 billion VND.

In addition, the State Audit proposed that the Government handle 807 billion VND in finance, including recovering 39.3 billion to the budget, reducing 176 billion in payment, reducing the bid package price by 157 billion, arranging to repay 248 billion VND in government bond capital, canceling the capital plan of 41.3 billion VND and handling 143 billion in other matters.

At the same time, this agency also requested the operator to direct ministries, branches and localities to clarify the responsibilities of collectives and individuals to handle violations. The Ministry of Planning and Investment is responsible for submitting to the Government to allocate capital plans for projects not on the list of projects using bond capital, capital plans that are spread out, not suitable for capital registration needs... In addition, some localities with violations also need to be recommended for strict handling.

Over the years, Government bonds have been an important channel for capital mobilization for the State, and the amount of capital mobilized has been increasing. According to data from the Ministry of Planning and Investment, the amount of capital issued by Government bonds in the period 2010-2015 reached a total of VND846,926 billion.

In fact, this source of capital is very large, but if invested ineffectively, causing waste and loss, it will become a public debt burden for the entire economy. On average, each Vietnamese person currently bears about 30 million VND of public debt. In 2016, it is expected to issue 220,000 billion VND of bonds out of a total of 409,000 billion VND of borrowed capital. The main purpose is to compensate for the budget deficit of 254,000 billion VND, spending on debt restructuring of 95,000 billion VND, larger than the 60,000 billion VND for development investment. Once the Government has to increase borrowing to repay debt, the source of capital for development investment will become increasingly limited.

According to the World Bank's forecast, by 2016, Vietnam's public debt will increase to 63.8% of GDP, 64.4% in 2017, and 64.7% in 2018.

According to VnExpress