Only 8.5 percent of the disbursement plan has been implemented

Although the money is not being used for investment projects, the state has to continue to pay interest on the capital. The average interest rate is 6.3 percent per annum.

Besides capital from government bonds issued this year, there is still money from government bonds carried forward from 2016. Only 17.2 percent of the capital has been disbursed.

Deputy director of the Ministry of Finance’s (MOF) Investment Department, Le Tuan Anh, said at a recent press conference that the slow disbursement began in 2015 and became more serious in 2016-2017, when the new Public Investment Law took effect.

“The major problem lies in procedures that take a longer time,” Anh said.

Deputy PM Vuong Dinh Hue also said at a conference reviewing disbursement work in the first six months of 2017 that disbursement was going too slowly, which had affected production, the state budget and economic growth.

MOF Minister Dinh Tien Dung confirmed that only VND5 trillion out of VND50 trillion worth of capital carried forward from 2016 had been disbursed. 

He said if the state’s capital can be disbursed smoothly, it will serve as ‘bait capital’ to attract more investment capital. However, he admitted that the disbursement plan may fail.

Dung said that ministries have to take responsibility for the slow disbursement, but the biggest problem is in the Ministry of Planning & Investment. 

On July 25, 2017, the PM’s working team inspected the slow disbursement at 13 ministries and local agencies. Minister and Chairman of the Government Office Mai Tien Dung said the slow disbursement was one of the ‘bottlenecks’ to growth.

“We have to pay interest, but we cannot spend the money. The capital left at the State Treasury is VND120 trillion,” Dung said.

Ngo Tri Long, an economist, commented that the macro economy has been more stable in recent years, which has allowed commercial banks to mobilize capital more easily. 

However, as outstanding loans to production and business remain modest, banks use mobilized capital to buy government bonds.

He warned that slow disbursement will make the capital use ineffective and lead to an increase in public debt and bigger budget deficits. “This is a big waste,” he said.

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