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Streamlining administration processes and bettering effectivity
8 min learn
Since 1993, Vietnam has attracted greater than US$80 billion in Official Improvement Help (ODA) and concessional loans, making it one of many largest ODA beneficiaries globally[1]. The Vietnamese Authorities has repeatedly affirmed the significance of ODA funds in socio-economic improvement and regarded it an integral a part of any mid-term public funding plan[2].
In December final yr, with the goal of streamlining the administration course of and bettering the effectivity relevant to ODA and concessional loans, the Authorities issued Decree 114/2021/ND-CP on the administration and use of ODA and concessional loans from overseas donors (Decree 114)[3], which took impact on 16 December 2021 and changed the earlier Decree 56/2020/ND-CP (Decree 56) on the identical matter. Decree 114 incorporates the next key content material.
Sorts of ODA and concessional loans
Decree 114 defines ODA and concessional loans as capital supplied by a overseas donor for Vietnam to help the event and assurance of welfare and social safety of the nation. They encompass three sorts, together with (a) non-refunded ODA, (b) ODA within the type of a overseas mortgage with between a 25% and 35% grant component (relying on whether or not it is a conditional or non-conditional mortgage); and (c) concessional mortgage, with phrases extra beneficial than a industrial mortgage, however a grant component decrease than that of an ODA mortgage.
Decree 114 introduces a brand new idea of emergency assist the place ODA and concessional loans will likely be used to offer catastrophe reduction, illness prevention or to carry out pressing duties to make sure nationwide defence, safety and overseas affairs. It’s anticipated that ODA and concessional loans might help relieve the burden at the moment positioned on the state finances in offering reduction throughout disasters or crises.
Governing physique
Along with State businesses and different organisations assigned with public funding through applications/initiatives funded by ODA or concessional loans, Decree 114 permits the committee managing State capital enterprises to help state-owned enterprises (SOEs) in accessing ODA and concessional loans.
Prioritised use for ODA grants
In the identical method it was performed underneath Decree 56, Decree 114 emphasises that using ODA grants be prioritised within the execution of initiatives/applications for the event of socio-economic infrastructure, capability enchancment, institutional and administrative reform. It additionally supplies 4 further prioritised makes use of for catastrophe reduction, illness prevention, inexperienced progress and innovation. These additions current a chance for sustainable improvement initiatives to realize entry to ODA grants.
Primary precept of state administration of ODA and concessional loans
Essentially the most elementary precept in utilizing ODA and concessional loans is that they should be used for improvement funding prices. They need to not be used to cowl common expenditures akin to taxes, charges, curiosity and land clearance prices, or to pay for common and capability constructing coaching which aren’t for the aim of transferring expertise, tools or equipment operational expertise. Corporations allotted with ODA and concessional loans needs to be cautious to keep away from spending the mortgage or grant on these common expenditure actions.
Process for administration and use of ODA and concessional loans
Decree 114 units out an in depth administration process for applications/initiatives utilizing ODA and concessional loans, which largely inherits the important thing necessities set out underneath Decree 56. As well as, Decree 114 introduces a brand new shortened process for emergency initiatives funded by ODA grants, which will likely be carried out pursuant to Article 42 of the Public Funding Legislation.
Funding Coverage Choice (IPD) software
In comparison with the IPD software necessities underneath Decree 56, the appliance underneath Decree 114 requires one much less doc. Particularly, the written request for appraisal of the Pre-FS and funding coverage proposal is not required. Though this discount demonstrates an effort to streamline the process to use for the IPD, the appliance nonetheless requires many paperwork together with, (i) request for the IPD issuance, (ii) approval of this system/initiatives proposal (except it falls inside an exemption set out underneath Decree 114), (iii) the governing physique’s inside appraisal report of the funding coverage, (iv) Pre-FS and funding coverage proposal in addition to related approvals from competent authorities and (v) different project-specific paperwork.
Process to amend the IPD
Underneath Decree 56, with respect to applications/initiatives whose IPD is topic to the Prime Minister’s approval, modifications to the contents of the granted IPD (akin to this system/mission’s title, donor, governing physique, goal, scope, place, period, complete funding) wanted to comply with the identical process as issuing a brand new IPD, which was very time-consuming.
Decree 114 appears to be like to create a extra versatile process the place solely the mission timing is altered, whereas different major contents keep the identical. If the quantity of ODA and concessional loans is decreased, however new monetary obligations come up with different major content material remaining the identical, the governing physique will ship a doc reporting on the explanation for such modification to the Ministry of Planning and Funding to assemble the opinion of the Ministry of Finance (MOF) and report back to the Prime Minister for the ultimate determination. Thus, the governing physique doesn’t must comply with the time-consuming course of as if making use of for a brand new IPD. Nonetheless, the steps for this new process stay unclear and it’s unsure simply how efficient and environment friendly will probably be in comparison with the outdated process.
Procedures for concluding, amending, extending and renewing worldwide treaties on ODA and concessional loans
Decree 114 clarifies the process to conclude, amend, lengthen and renew worldwide treaties on ODA and concessional loans by stipulating that it follows the process within the Legislation on Treaties. As well as, Decree 114 supplies for an expedited process to conclude worldwide treaties on ODA and concessional loans on behalf of the Authorities on account of pressing want.
This expedited process represents the Authorities’s efforts to speed up the method of concluding and amending worldwide treaties on ODA and concessional loans. ODA donors and lenders are additionally given a extra lively position on this course of, eg offering the draft treaty. Nonetheless, we count on the expedited process for use occasionally because it’s solely relevant to pressing conditions and would require huge efforts from the MOF, who look like required to take a number one position on this course of.
Use of ODA and concessional loans by SOEs
The chapter on SOEs’ use of ODA and concessional loans is a brand new addition in Decree 114. It addresses (i) the sector and circumstances for SOEs’ use of ODA and concessional loans; (ii) the appliance course of (which is usually ruled by the Legislation on Funding and the Legislation on Public Debt Administration); and (iii) the administration course of (which is usually ruled by the Legislation on Public Debt Administration). With this chapter, SOEs at the moment are formally eligible to make use of ODA and concessional loans after a interval of coverage vacuum. Donors and lenders will now even have extra selections for initiatives and counterparts.
What’s subsequent
Though Decree 114 has come into impact, it is seemingly that guiding Round 48/2021/TT-BTC on the types for disbursement studies underneath Decree 56, which was issued in June of 2021, will proceed to be utilized in observe for now. As lots of the newly launched procedures in Decree 114 stay unclear, it’s anticipated that guiding circulars will likely be issued to elaborate on the interpretation and implementation of those procedures.
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