Vietnam Lags in Spending Allocated Funds

Vietnam is facing mounting pressure to speed up the allocation and disbursement of funds for essential projects and particularly those in transportation that remain significantly stalled.

Despite the Prime Minister's repeated directives, the Ministry of Finance has just revealed a dismal disbursement rate for those critical projects for the first quarter of 2024.

As of March 31st, only 11.2% of the state budget capital plan for the year, totaling VND 125,608.2 billion (USD 4.97 billion) had been disbursed. This falls short of the national average disbursement rate of all projects of 12.16%. The disbursement rate of funds from local budgets is even more concerning, standing at a mere 6.2%.

Several projects have yet to begin disbursement or are proceeding at an alarmingly slow pace of less than 0.1% of their allocated budgets. Additionally, certain projects lack adequate funding from local budgets.

Examples include component 2 of the Khanh Hoa - Buon Ma Thuot Expressway Project, phase 1, and specific components of the Hanoi Capital Region Ring Road 4 Project, where billions of VND (millions in USD) from the 2021-2025 plan remain unassigned.

Prime Minister Demands Action

In response to the sluggish progress, the Prime Minister issued Decision No. 258/QD-TTg on March 30th. The decision aims to boost funding from central budget revenue increases, savings, and cuts realized in 2021.

Funds have been designated for the Ministry of Transport and eight localities to support three critical national highway projects.

Unfortunately, as of April 23rd, only four of the designated localities have assigned detailed plans for VND 4,021 billion (USD 159 million) in funding. The remaining four localities have yet to allocate the VND 2,439 billion (USD 96 million) earmarked for them.

Finance Ministry Issues Urgent Calls

To accelerate progress, the Ministry of Finance has just issued document No. 4426/BTC-VDT, demanding that the Ministry of Transport and relevant localities take immediate steps. This directive emphasizes the importance of several key actions.

First, it stresses the need to ensure that local budget capital plans for 2024 align closely with the precise needs of projects and remain strictly within approved schedules.

Additionally, the Ministry of Finance underscores the urgent need to expedite the distribution of funding derived from increased central budget revenue in 2021.

Finally, the directive reinforces the critical obligation of ministries and localities to strictly adhere to all measures outlined by the government and Prime Minister, which are designed to promote the efficient and timely disbursement of public investment capital.

The Ministry of Finance's report underscores the urgent need for Vietnam to overcome bureaucratic hurdles and inefficiencies hampering the progress of its vital transportation infrastructure projects. Failure to do so carries the risk of significant delays and potential cost overruns.