The Ministry of Planning and Investment has written to ministries, agencies and local authorities requesting capital advances after the government has approved to set aside VND30 trillion in fiscal 2013 to speed up the progress of public investment projects.
For VND15 trillion sourced from the State budget, small projects will be given up to 100 percent of capital they still lack while bigger projects will receive less advanced capital.
The State budget will advance a maximum 100 percent of capital shortfall for projects lacking under VND30 billion while those shy of VND30-100 billion will receive the highest advance ratio of 50 percent. Projects in need of VND100-500 billion will receive 25 percent and those lacking more than VND500 billion will be given only 15 percent.
However, the ministry affirms that the total capital advanced for each ministry will not exceed 20 percent of its 2012 plan.
The VND15 trillion advance sourced from government bonds also applies the same rule. Accordingly, projects using government bonds in the 2013-2015 period and are short of less than VND30 billion will be advanced 100 percent. Projects lacking from VND30-100 billion will receive up to 70 percent while those short of between VND100 and VND500 billion will receive 35 percent.
For projects lacking from VND500 billion, investors will be given a maximum 30 percent in advance.
The ministry has told ministries, agencies and local authorities with demand for advanced capital to submit their suggestions before August 5 to make a report to the government.
Many experts are astonished at the government’s additional capital, which will be given to projects that have been finalised and put into use but lack capital for payments, and projects set for completion in 2012 or likely to be finished in the first half of 2013. The government’s approval for the financing advance goes against Directive 1792 of the prime minister, which stipulates that public investment capital must be distributed for a medium-term vision.
In addition, the decision again affirms that State budget principles have not been well respected as warned by the National Assembly’s Finance and Budget Committee over the past years.
The advance of VND15 trillion worth of 2013 government bonds also reveals that the government has failed to curb public spending. Under calculations of the National Assembly’s Economic Committee, the government between 2010 and 2011 borrowed an average VND110 trillion each year through issuing bonds in the country. The figure double that in the 2007-2009 period when VND56 trillion was borrowed annually.
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 fiscal policies were tightened to curb inflation, the central budget spending still rose a respective 18.9 percent and 20.4 percent year-on-year.