Removing "bottlenecks" in counterpart funds for ODA projects

According to Minister of Planning and Investment Bui Quang Vinh, one of the main reasons for slow ODA disbursement in Vietnam is primarily due to lack of counterpart capital.

The issue of slow progress of many projects using ODA (official development assistance) capital has been of public concern in recent times. Regarding this issue, Minister Bui Quang Vinh said that Vietnam is one of the countries that is considered to use ODA effectively. This has also been confirmed by countries around the world.

However, Vietnam also has limitations, which is the slow disbursement of ODA compared to many other countries. Recently, the Ministry of Planning and Investment, together with major donors such as the World Bank (WB), the Asian Development Bank (ADB), the French Development Assistance Fund, and countries (Japan, Australia, EU) that sponsor Vietnam, concluded that one of the main reasons for slow disbursement in Vietnam is primarily due to the lack of counterpart funds.



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When the commitment is to have enough counterpart capital, the average ratio is 80:20. Therefore, large infrastructure projects such as highways, national roads... cost up to 2-3 billion USD. If 3 billion USD, Vietnam has to match a very large amount of capital, 20% of the 3 billion capital, which is about 600 million USD. Moreover, Vietnam has many such projects, leading to low counterpart resources. Therefore, the use of ODA capital is currently slow.

Currently, the Ministry of Planning and Investment is coordinating with ministries and branches to find ways to resolve this issue, to ensure an appropriate proportion of counterpart capital.

Besides, other main reasons leading to slow ODA disbursement are slow site clearance and the capacity and management of Project Management Boards at the central and local levels, especially at the local level, which are often unstable and change frequently.

To promote the use of ODA capital, according to Minister Bui Quang Vinh, it is necessary to focus on solving the above three causes. The Ministry of Planning and Investment and related ministries and sectors are making efforts to remove these difficulties. The first is to complete the legal framework for ODA capital management. Specifically, amend and supplement Decree 131 of the Government on the management and use of ODA resources. The Ministry of Planning and Investment has worked with ministries, sectors and international agencies and organizations to evaluate, review and revise many times; at the same time, it is preparing to submit to the Government in early July.

To resolve the issue of counterpart capital resources, the Ministry has worked with relevant ministries and branches to discuss with agencies providing ODA to Vietnam to find solutions.
Regarding site clearance, the Central Resolution on building synchronous infrastructure development has clearly stated that in the coming time, along with amending the Land Law, it will be necessary to amend and form a separate mechanism for site clearance compensation policy for important projects of the country.
Also according to the Minister of Planning and Investment, since 2010, when Vietnam announced that it was a country with an average income per capita of over 1,000 USD, that is, in the group of middle-income countries, the amount of ODA granted to Vietnam has been greatly reduced to be transferred to less developed countries. Therefore, borrowing ODA capital in the coming time needs to be carefully considered, the idea that having a lot of ODA capital is good needs to be eliminated, but the issue needs to be considered where the capital needs are, how to borrow and the loan must be repaid.

On average, we attract about 7 billion USD each year, of which 7.3 billion USD was in 2012. Over the past 20 years (from 1989 to present), the total ODA capital that countries plan to support Vietnam is 71 billion USD. The capital sources committed to help Vietnam are 53 billion USD.

According to (Chinhphu.vn)-LT