The Ministry of Finance (MoF) has commented on a proposal from the Ho Chi Minh City People’s Committee on removing capital difficulties to ensure construction progress of the Metro Line No.1 and No.2 projects.

For Metro Line No.1, connecting Ben Thanh and Suoi Tien, implementation has seen problems arise in determining the value of ODA loans allocated from the central budget in Japanese Yen (JPY) or Vietnam Dong (VND), as well as the exchange rate between the two currencies. In order to promote a final settlement of this problem, MoF said that the People’s Committee needs to agree with the Ministry of Planning and Investment (MPI) in determining the amount of capital allocated for the project in accordance with the financial mechanism approved by the Prime Minister.

For Metro Line No.2, connecting Ben Thanh and Tham Luong, MoF has assessed that project implementation is very slow. Regarding the loan, the ministry has not yet received approval from Germany’s Kreditanstalt für Wiederaufbau (KfW) on extensions and adjustments to the principal repayment schedule. MoF also proposed that the People’s Committee update the progress of the project and discuss with KfW about the responsibility to pay the commitment fee for the loan amount in accordance with the provisions of the loan agreement.

The biggest problem is that the Project Management Board and the People’s Committee are late in implementing the project and in responding to the sponsor’s recommendations. Based on the reply of the People’s Committee on the above matters, MoF will continue to consult with KfW for an extension of the grant and loan disbursement period for the projects.