Public investment ‘congestion’ reduces economic growth momentum

According to information from the Ministry of Finance, by the end of May, the disbursement rate of public investment nationwide is estimated at more than VND 102,029 billion, equal to more than 22% of the plan assigned by the Prime Minister and nearly 24% lower than the same period last year. In particular, the oda disbursement rate is very low, nearly 3%.

Public investment ‘congestion’ reduces economic growth momentum
The rate of disbursement of public investment nationwide in 5 months is estimated at more than 102,029 billion VND, equal to more than 22% of the plan assigned by the Prime Minister. Photo: Financial Times.

Besides some ministries, localities have high disbursement rate, reaching more than 40% of the plan such as Thai Binh (74%), Hung Yen (47%), State Audit (47%), Nam Dinh (45%) , Thanh Hoa (44%), Ha Nam (41%), most of the ministries, branches and localities have disbursement rate of less than 15% such as Bac Kan reaching nearly 7%, Can Tho nearly 9%… Besides, 8 sets have disbursement rate below 1%.

Former Director of the Central Institute of Economic Management Nguyen Dinh Cung said: “Slower and lower disbursements certainly reduce our growth motivation. Meanwhile, this is one of the most expected motivations”

The reason pointed out by the ministries, branches and localities is that the 4th wave of Covid-19 epidemic re-emerged in 39 provinces and cities, causing many localities to apply distance and blockade measures, leading to the re-occurrence of the disease. to the construction progress of many projects stalled. This also explains the situation of not having the acceptance volume to carry out payment procedures with the State Treasury, leading to the disbursement of the public investment plan being affected.

In addition, the price of materials has also recently increased dramatically, especially construction steel has increased by more than 40% at one point, affecting the mobilization of resources and construction progress of contractors.

Mr. Ho Dinh Chung, General Director of Deo Ca Group Joint Stock Company said: “Due to the scarcity of sugar materials, the price of raw materials spiked, suppliers delayed the supply of raw materials. Some suppliers are subject to contract penalties or cancellations.”

Explaining the reason why the disbursement rate of ODA is very low, the Ministry of Finance said that the response to the comments of the ODA donors was very slow. For example, for the project to upgrade the irrigation system of the Len and Mo rivers (KEXIM1) in Thanh Hoa, the time for appraisal and approval of the donor’s bidding documents is usually about 1 month late for each submission, leading to to a longer time for contractor selection and at least 6 months to award contracts compared to domestic projects.

In addition, the projects that have signed the foreign loan agreement, procedures for adjusting investment policies also take a long time. There are some projects such as remote medicine at Viet Duc Friendship Hospital that are carrying out procedures to extend the implementation time or the Project cho Ray Hospital facility 2 using Japanese ODA capital is adjusting the agreement, adjusting the feasibility study report.

Facing the above situation, the Ministry of Finance proposed ministries, branches and localities to speed up the disbursement of public investment capital for assigned and managed projects such as speeding up the site clearance, focusing on removing difficulties. difficulties and problems related to land and resources. The Ministry of Finance also requested to review and transfer capital plans between slow disbursed projects to projects with good disbursement progress and still lacking capital. The establishment of a working group to promote capital disbursement in each ministry and locality to handle bottlenecks in public investment disbursement associated with the responsibility of the head is also proposed by the Ministry of Finance.

Agreeing with this view, 14th National Assembly Member Hoang Van Cuong also said that the review of public investment projects should be carried out right from the stage of preparing to approve the project, limiting the number of new groundbreaking projects and focusing that capital on unfinished projects to put the project into use soon.

In addition, the head of the Economic Advisory Group of Prime Minister Nguyen Duc Kien also said that in order to accelerate the disbursement of public investment, it is necessary to assign decision-making power to ministries, branches and localities in deciding which projects to invest in. First, which projects to invest in later, to avoid putting unnecessary pressure on fiscal and monetary policies.

At a meeting with the Prime Minister on May 25, the Ministry of Planning and Investment said that the total possible budget estimate for the medium-term public investment plan for the 2021-2025 period is VND 2.87 million billion, an increase of VND 120,000 billion compared to the previous estimate. The additional part of the estimate from savings in recurrent expenditures is transferred to public investment and does not increase the total budget expenditure.

According to the Ministry of Planning and Investment, compared with the 2016-2020 period, the budget structure expected to be allocated to regions in the 2021-2025 period has a clear change in the direction of not only giving priority to supporting disadvantaged areas, difficult, mountainous, border areas, islands, ethnic minority areas, areas frequently affected by natural disasters, storms and floods, but also ensure the development of dynamic regions and growth poles. In which, the capital allocated per capita in the Central Highlands is the highest, about more than 5.8 million VND/person.

At the same time, the view of public investment allocation is to resolutely overcome the situation of scattered, wasteful, and inefficient investment, promote decentralization, decentralization, assignment and assignment of duties along with strengthening supervision, inspection, performance evaluation and strict discipline reward. Public investment capital must really play a leading role, as a primer to attract maximum resources from other economic sectors.

Accordingly, the Ministry of Planning and Investment said that it had cut 6,447 previously planned projects to about 5,397 and moved to only about 5,000 projects.

Source: – Translated by

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