Government seeks NA’s approval on increasing charter capital for VDB and VBSP by 4.5tr dong

24-Dec-2016 Intellasia | VnEconomy | 6:00 AM Print This Post

In the morning of December 22nd 2016, the National Assembly (NA) Standing Committee has held a meeting to consider the adjustment of foreign capital plan in 2016. At the meeting, deputy minister of Planning and Investment Nguyen The Phuong said that the total foreign capital plan in 2016 is set at 50 trillion dong. By November 2016, ministries, industries and localities have disbursed 74.9 percent of the plan. Some units have been unable to make disbursement.

The government expects to cut this plan in 2016 by 5,854,91 billion dong and at the same time proposed to add 14,235,46 billion dong to the plan, including the supplement of charter capital to Vietnam Development Bank (VDB – 1,782,509 billion dong) and Vietnam Bank of Social Policies (VBSP – 2.7 trillion dong).

Examining this content, many members of the NA’s Finance and Budget Committee agreed to the proposal of the government and said that the additional allocation of charter capital to these two banks has been mentioned for several times but remains unmet. Thus, it is necessary be completed as it will facilitate these two banks to better perform their functions and responsibilities. Moreover, the fund allocated for the two banks is within the capital limit assigned under the medium-term investment plan in 2016-2020 period.

However, the examination agency requested the government to clearly explain whether the use of Official Development Assistance (ODA) to finance the charter capital for the two policy banks is in accordance with the signed credit agreements, or included in the unused borrowing items of the government for balancing the budget of capital construction investment arranged in 2016 and can be used to supplement charter capital for the two banks or not. It the answer is yes, the examination agency will then can submit the NA for approval.

Chair of the NA’s Finance and Budget Committee Nguyen Duc Hai said that there are members commented that this adjustment is not compliance with the signed agreements and the principle of allocating capital according to the provisions of the Law on the State Budget because the foreign loan agreements in 2016 have been signed for implementing the missions of specific projects and programmes,.

Therefore, Hai recommended that it is necessary to consider the use of this fund to supplement charter capital for these two banks as it should be assigned to the projects having needs for additional capital and the charter capital funding for these two banks should be located in the medium-term plan to 2020. vice Chair of the NA Phung Quoc Hien also questioned whether raising charter capital for these two banks is constitutional if it was not included in the estimates.

According to deputy minister of Finance Tran Xuan Ha, the total funding for projects and programmes worth more than 44 trillion dong cannot be used to supplement charter capital for VDB and VBSP as each project will receive a certain amount of disbursement and the revenues and expenditures will be accounted specifically for each project.

The second source of foreign capital fund is the direct money support for the State budget of the programme on climate change and higher education development worth a total value of five trillion dong. Only 1.3 trillion dong remain in the fund for climate change programme. If it is used, the maximum usable amount is only 1.3 trillion dong and when the programme is implemented, it must be redeemed.

Ha said that the MPI has proposed to use the fund of the World Bank (WB) for supporting the enhancement of competitiveness but this fund has been balanced in the State budget 2017 and can hardly be withdrawn in 2016.

Despite stressing the agreement to the need for supplementing charter capital of VDB and VBSP, deputy minister of Finance Ha said that the use of 2016 State budget is not suitable, and the capital fund for 2017 can be used but it should be adjusted in order to be included in the plan.

Deputy minister of Planning and Investment Phuong said that although the fund to increase charter capital for these two banks is not included in the budget estimates, it is still appropriate if the NA Standing Committee allows it, because the above mentioned fund of the WB is not tied to any certain objects and the government has sole discretion.

The NA’s Chairwoman Nguyen Thi Kim Ngan suggested that the opinions of the Ministry of Finance should be noted in order to ensure the legality of the charter capital funding for these two banks. Emphasising that it is late for the government to adjust the foreign capital plan as there are only nine days left in 2016, NA’s Chairwoman requested the government should seriously draw the lessons in operating

According to NA’s Chairwoman, the slow disbursement of State budget has not yet been solved over the years. The management of the use of foreign capital remains inadequate such as not being close to the situation or funds were still allocated to some units which are incapable or not in need for fund. Meanwhile, some localities received excessive disbursement without clear explanations of the reasons. NA’s Chairwoman Ngan required the government to assess and specifically analyse the causes to not let such situation be repeated in 2017.


Category: Finance, Vietnam

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