Vietnam faces challenges in meeting the ambitious 95% disbursement target for official development assistance (ODA) and foreign concessional loans in 2024, as set by the Prime Minister. The Ministry of Finance has announced the deployment of e-funding withdrawal software as a critical measure to expedite disbursement processes across provinces.

At a conference on December 3 in Hanoi, the Ministry of Finance reviewed the status of public investment disbursement from foreign sources in the last months of 2024. As of November 30, cumulative disbursement of foreign loans across provinces reached only 30.3% of the annual plan, including both allocated funds and on-lending capital.

Six of 53 provinces achieved a disbursement rate above 60% (Hoa Binh, Ninh Binh, Hue, Binh Dinh, Khanh Hoa, and Ninh Thuan), while five provinces (Dak Lak, Lam Dong, Long An, Kien Giang, and Hau Giang) had yet to disburse any funds.

Three key obstacles were identified as contributing to delays:

Project Adjustment Delays: Issues in adjusting investment policies, project timelines, and loan agreements were encountered in 21 of 98 projects (22%) across 17 provinces.

Implementation Hurdles: Challenges during project execution and disbursement affected 40 of 98 projects (39.8%) in 23 provinces.

Funding Shortages: Insufficient budget allocations, both for grants and on-lending, impacted 17 of 98 projects (17.3%) in 10 provinces.

Nguyen Hoang Lam, Head of the Local Project Management Division at the Department of Debt Management and External Finance, noted that achieving a 95% disbursement rate by year-end is unlikely given the limited time remaining.

Deputy Director Hoang Hai of the Department of Debt Management and External Finance highlighted the urgency, with the Lunar New Year on January 31, 2025, requiring disbursements to be processed promptly to ensure funds reach project implementers and contractors in time for the holiday. While the Ministry of Finance and the State Treasury can process approvals in 1-2 days, funding institutions often require significantly more time.

The Ministry of Finance announced plans to implement an e-funding withdrawal software system to streamline the disbursement process. This software aims to help project management units expedite fund withdrawals, enabling faster completion of ODA-funded projects.

“We are finalizing technical preparations and infrastructure for the system and will promptly notify provinces and project management units to initiate deployment,” said Deputy Director Hai.

The new Public Investment Law, effective January 1, 2025, along with amendments to the State Budget Law and Procurement Law, will introduce significant institutional changes.

The Ministry of Finance is also collaborating with the Ministry of Planning and Investment to revise Decree 114 on ODA and concessional loan management. These reforms aim to streamline administrative procedures and further facilitate disbursement processes.

“The upcoming regulatory changes will simplify procedures, creating more favorable conditions for provinces to accelerate disbursement and project completion,” Hai added.

Binh Minh