People are seen wading through a flooded road in HCMC earlier this year. The city is in dire need of much funding to implement infrastructure and flood control projects toward 2020

The strong increase is attributable to the city’s rising borrowing demand to implement infrastructure and flood control projects toward 2020, according to a document the city recently submitted to the Prime Minister to ask for a financing mechanism for a flood management project in the city.

According to the document, the city had borrowed VND25.1 trillion as of December last year, including nearly VND14.67 trillion from domestic lenders and around VND10.45 trillion from abroad.

HCMC will have to set aside VND4.25 trillion a year to pay principal and interest in the next five years. This will make it difficult for the city to allocate sufficient finances for development projects.

The city government said it has drawn up seven sub-projects to upgrade drainage systems and reduce pollution at the Tham Luong-Ben Cat-Rach Nuoc Len basin as suggested by the World Bank, the ministries of planning-investment, finance, agriculture-rural development, construction and natural resources-environment and the State Bank of Vietnam.

These sub-projects are components of the flood control project worth US$437 million. Of the amount, US$400 million would be sourced from the World Bank and the remainder from the city’s budget.

The project is expected to benefit two million citizens in nine districts by 2020.

At present, HCMC must repay official development assistance (ODA) loans and those from other sources which it has borrowed to carry out the master zoning plans approved by the Prime Minister for the drainage and flood control programs in the city.  

The city government said it will have to mobilize hundreds of trillions of dong to execute the two plans. In the past 10 years, the city has injected nearly VND24.3 trillion into projects to dredge canals and upgrade drainage systems but the sum is enough to complete just 1.2% of the workload.        

Due to financial constraints, the HCMC government has proposed the Government borrow loans from the World Bank for the city to finance these projects.

SGT