Reasons why 27 provinces and cities require the return of more than 5.5 trillion VND in loan funds
Vietstock – Reasons why 27 provinces and cities requested the return of more than 5.5 trillion VND in loan funds
27 localities across the country have just requested repayment of more than 5.5 trillion VND in foreign loan funds this year. The reason why it is recommended to reduce the re-borrowing plan is because the project has not completed the investment procedures and encountered problems such as site clearance and bidding; when the project cannot fully allocate the funds plan, the local government requires another reduction in loan funds.
The Ministry of Debt Management and Foreign Finance stated that as of the end of August this year, 27 localities had requested to reduce their loan budgets, with total capital exceeding VND5.5 trillion.
Areas that will return loans include: An Giang, Bac Giang, Bac Ninh, Ben Tre, Binh Duong, Binh Thuan, Ca Mau, Can Tho, Dak Lak, Khanh Hoa, Kon Tum, Lai Chau, Lam Dong, Lang Son, Lao Cai, Ninh Binh, Phu Yen, Quang Binh, Quang Nam, Quang Ninh, Quang Ngai, Ho Chi Minh City, Thanh Hoa, Tra Vinh, Vinh Phuc, Tay Ninh, Tien Giang.
The reason why it is recommended to reduce the loan fund plan is that the project has not yet completed the investment procedures; it has encountered problems such as site clearance and bidding. When projects are unable to fully disburse funding plans, local requirements reduce loan funding again.
27 localities across the country have requested to reduce their loan budgets, with total funds exceeding VND 5.5 trillion. (Illustration photo: ST).
On the contrary, six places requested to increase loan capital, totaling nearly 350 billion VND, including: Binh Dinh, Hanoi, Hai Duong, Hai Phong, Nam Dinh, and Phu Tho.
According to the plan approved by the government this year, local loans from the government’s foreign capital and other loan sources are VND27.2 trillion. In addition, local governments still need to repay nearly 5 trillion VND in debt, including 2.8 trillion VND in principal and nearly 2.2 trillion VND in interest.
According to the head of the Department of Debt Management and Foreign Finance, the return of ODA funds to ministries and localities is only the payment of program funds, not money. According to the provisions of the Public Investment Act, projects to be allocated must fall within planning limits.
“Essentially, all ODA funds are for each specific project and are released based on actual progress. Project A loans cannot be used for project B. Funds can only be returned or transferred according to the plan. It is implemented in accordance with domestic procedures and does not affect the loan agreement or for each Loan funds are provided for the project. The project will only be affected if it cannot be completed as planned, resulting in the arrival of the payment deadline, the need to negotiate an extension of the loan agreement, or the cancellation of capital.” said the head of the Foreign Ministry of Finance.
The leader of the Ministry of Debt Management and Foreign Finance said the loan return scheme would not affect public debt. Public debt is only counted when projects are paid for, lenders notify the transfer of funds, and government debt is recorded.
After the passage of the revised Public Investment Law, public investment funds will be redistributed next year to ministries and localities that have not fully allocated public investment funds. This would also help limit the holding of public investment capital that is not fully disbursed.
By the end of 2022, Vietnam’s public debt will reach approximately VND36 billion; the total debt repayment during the period will be approximately VND380 trillion.