Vietnam’s disbursement of official development assistance (ODA) funds in the first half of this year stood at VND7.42 trillion (US$318.92 million), equivalent to 13.1% of the year's plan and being 3.6 times the figure recorded in the same period last year, according to Tran Xuan Ha, vice minister of finance.

Vice Minister of Finance expected faster disbursement progress of ODA funds in the remaining months of 2020. Photo: MoF.

Despite improvements, the disbursement rate remains significantly lower than expectation, Ha said at a conference on June 25.

Without strong measures to speed up the process, a slow disbursement of public investment funds and also that of the ODA could have serious consequences on the government’s efforts to stabilize macro-economic conditions, eventually affecting the prospects of realizing socio-economic targets, Ha stated.

Truong Hung Long, director of the Department of Debt Management and External Finance under the Ministry of Finance (MoF), attributed the Covid-19 impacts, among others, to a delay in the implementation of ODA-funded projects.

Specifically, most ODA-financed projects would require the import of equipment and machinery abroad, or the mobilization of foreign experts, engineers or consultants, Long added, saying all these activities have been suspended during the Covid-19 outbreak.

Additionally, changes in ODA policies, slow site clearance process, contractors’ limited capacity, disputes between project owners and contractors, are among notable issues preventing a faster ODA disbursement.

Long said the MoF would continue to cooperate with other government agencies and provinces/cities in addressing bottlenecks during the ODA disbursement process.

Low disbursement rate could lead to additional costs and higher commitment fees for the government, which are charged by a lender to a borrower for an unused credit line or undisbursed loan. 

More importantly, there could be potential contract disputes between project owners and contractors, affecting Vietnam’s credibility, Long added.