VietNamNet Bridge – The HCMC government has proposed the Ministry of Planning and Investment assist the city to mobilize official development assistance (ODA) and preferential loans for its large-scale infrastructure, transportation and environment projects.

Illustrative image -- File photo

The projects include Metro Line No. 5 connecting Saigon Bridge and Can Giuoc Coach Station, Metro Line No. 3A linking Ben Thanh and Mien Tay Coach Station, Metro Line No. 1’s Ben Thanh Central Station, and phase three of a major water environment rehabilitation project in the basin of Tau Hu-Ben Nghe-Kenh Doi-Kenh Te canal.

For Metro Line No. 2 joining Ben Thanh Market in District 1 and Tham Luong in District 12, the city proposed the ministry review and approve a selection of contractors together with project adjustments. The signing of contracts will only be done after the project adjustments are approved by competent authorities.

According to a report sent on May 12 to the Government Office, the Ministry of Planning and Investment and relevant ministries, the city currently has 17 ODA-funded projects worth a total of VND104.5 trillion (US$4.68 billion), of which VND88.9 trillion is ODA and the remainder is reciprocal capital.

In quarter one, ODA disbursements reached only 20% of the target. The reasons for low disbursements in ODA projects include slow site clearance, compensation and relocation, construction difficulties, underground works, design adjustment, time-consuming procedures, and changes in loan agreements.

Regarding ODA needs nationwide, at a meeting in January on a new mechanism for lending on foreign loans to provinces and cities, Truong Hung Long, head of the ministry’s Department of Debt Management and External Finance under the Ministry of Finance, said that to provide resources for poorer provinces facing high public debt, the State Budget Law, which was passed by the National Assembly last year, and will take effect next year, allows local governments to actively borrow to fund their investment projects, effectively giving them the green light to run a budget deficit.

Long said Vietnam will have to borrow commercial loans from 2017 instead. ODA capital towards 2017 will fall, so it is prioritized for infrastructure upgrades in poor localities. Big provinces and cities will have to take out commercial loans to finance their development plans.

Van Nam

SGT