Hard to Balance Public Investment Fund in 2021

9:25:06 AM | 27/8/2020

Making the public investment plan for the 2021-2025 period, carefully preparing the public investment plan for 2021 and speeding up public investment disbursement are all key to economic recovery in the new normal scenario. However, according to the Ministry of Planning and Investment, as the Covid-19 pandemic may still retain certain impacts in 2021, it will be more difficult to balance the fund for public investment. The ministry suggested localities select suitable and effective projects to ensure scheduled progress.

Capital arrangement must be in line with disbursement progress, capacity

The Ministry of Planning and Investment required ministries, central and local agencies to clearly define goals and priorities in the 2021 public investment plan in accordance with Directive 20/CT-TTg, dated July 29, 2019, on medium-term public investment planning for the 2021-2025 period and investment capital sources in 2021.

Accordingly, the State capital arrangement for investment plans must be made in the given order of priority. Funding priority will be given to key national projects, key infrastructure development programs and projects that produce ripple effects on other fields, motivate socioeconomic development, draw more private funds and ensure harmonious development among localities and territories. The amount of capital allocated for each project must be consistent with its working progress and disbursement capacity in 2021.

Foreign capital arrangement must be consistent with contents of agreements and commitments to donors. Sufficient funds will be allocated for projects that will be concluded in 2021 under the foreign loan agreement and are not extended.

Furthermore, the allocation of State funds in 2021 must ensure that the State fund is sufficient for transitional projects and projects that will be completed in 2021 to promote investment efficiency. Projects that get the fund behind the given time in the 2016-2020 period and continue in the 2021-2025 period must have their funding allocation completed in 2021, and minimize cases of reporting to the Prime Minister and the People’s Council that usually take more time from projects.

Particular priority is given to settling payment for completed items of projects scheduled for completion in the 2016-2020 medium-term public investment period, but transited to the 2021-2025 period.

The capital will be given to transitional projects to be completed after 2021 according to the registered progress, but this must be consistent with the funding timing specified in Clause 2, Article 52 of the Law on Public Investment (Group A projects cannot exceed six years, Group B projects cannot exceed four years and Group C projects cannot exceed three years).

After arranging sufficient capital for the above-mentioned tasks, the fund will be only allocated to new construction projects characterized by inter-regional connectivity, urgent traffic connectivity, national defense and security, natural disaster prevention, landslide settlement, water security, climate change and projects under national target programs approved by the National Assembly.

Picking up suitable and effective projects

It is only about 2-5 months till the Government sends a report on the medium-term public investment plan of the 2021-2025 period to the National Assembly. However, according to forecasts by the Ministry of Planning and Investment, as the Covid-19 pandemic may last till 2021, it will be more difficult to balance the fund for public investment. The ministry suggested localities select suitable and effective projects to ensure the scheduled progress.

Local authorities need to actively allocate capital for good investment preparation, select projects that match the overall planning, produce inter-regional impacts, and boost rapid and sustainable socio-economic development.

Mr. Tran Duy Dong, Director of the Department of Local and Territorial Economy (Ministry of Planning and Investment), said that in August 2020 the Ministry of Planning and Investment is expected to host conferences on 2021-2025 medium-term plans integrated with the 2021 plan with localities. If necessary, it will work with major localities. Specific contents, recommendations and proposals of each locality will be discussed and shared at these conferences.

To speed up the disbursement of public investment planned for 2020 to lay the premise for 2021, the Ministry of Planning and Investment also proposed localities, in the last months of the year, actively complete investment procedures, speed up the delivery progress of added plans in 2016-2020 and plans in 2020, and effectively apply solutions and policies to disburse more public investment capital in the last months of the year.

In case the fund is transferred to other projects, localities are responsible for the accuracy of disbursement rates in their proposals for capital transfer. In case of transferring the fund to other projects, they are responsible for proposing capital arrangement for affected projects in the following years to complete those projects on schedule.

By Ha Thu, Vietnam Business Forum