The government has approved the proposal of the Ministry of Planning and Investment to advance VND30 trillion of the fiscal year 2013 to accelerate the progress of the public investment projects likely to be completed early.
In particular, VND15 trillion will be sourced from the State budget and the other VND15 trillion from government bonds. The advanced money will be used in the fields of transport, education, healthcare and those projects funded by ODA and government bonds.
The planning ministry stated the additional capital will only be given to the projects that has been finalised and put into use but lack capital for payments, and the projects set for completion in 2012 or likely to be finished in the first half of 2013.
The early disbursement for 2013 public investment is also expected to help curm the mounting inventories of many commodities, especially building materials.
Minister of Planning and Investment Bui Quang Vinh told the Daily that the additional fund plays a vital role in speeding up the finalisation of the projects so that they can be put into use promptly. In addition, “this will stimulate material consumption, create jobs and boost production,” he said.
He emphasized that the fund would be strictly supervised to avoid dispersed and wasteful spending as requested by Directive 1792 of the prime minister.
This advanced amount coupled with the scheduled disbursement for this year will result in some VND22-23 trillion of public investment being poured into the economy every month during the rest of the year, said the minister.
When asked whether such a loosened fiscal policy, coupled with monthly credit growth forecast at 2 percent in the second half, would fuel inflation, Vinh stressed his ministry had made thorough considerations.
“We have calculated very carefully to prevent the return of high inflation,” he said.
The minister explained the monthly public investment of VND22-23 trillion would help resolve the issue of high inventory and improve the aggregated demand of the economy, which has become a concern.
According to the planning ministry, the investment and development capital sourced from the State budget had amounted to some VND73.6 trillion as of June 15, accounting for only 40.9 percent of the year’s plan.
Slow disbursement of this capital source is said to be one of the main reasons for the difficulties of the manufacturing sector and of private investment.
Vinh said: “One of the measures to boost production and stimulate growth is to accelerate public investment capital disbursement, which will help increase the demand for cement, steel, materials and labour… This measure needs to be implemented drastically.”
According to the plan for the fiscal year 2012 passed by the National Assembly, the government is allowed to extract VND180 trillion from the State budget and VND45 trillion from government bonds to spend on investment and development.
Commonly, the fiscal plan is passed by the National Assembly in November every year.
According to the National Financial Supervisory Commission, the State budget spending has been rising over the past years, with an average growth of 20 percent a year. Even in 2008 and 2011, when the fiscal policy was tightened to curb inflation, the central budget spending still picked up a respective 18.9 percent and 20.4 percent year-on-year.