Resolution No. 582/NQ-UBTVQH14 dated October 05, 2018 of the National Assembly Standing Committee on a number of tasks and solutions to continue stepping up the implementation of policies and regulations on management and use of foreign loans

RESOLUTION

On a number of tasks and solutions to continue stepping up the implementation of policies and regulations on management and use of foreign loans^[1]

THE NATIONAL ASSEMBLY STANDING COMMITTEE

Pursuant to the Constitution of the Socialist Republic of Vietnam;

Pursuant to Law No. 87/2015/QH13 on Oversight Activities of the National Assembly and People’s Councils;

Pursuant to the National Assembly Standing Committee’s Resolution No. 412/2017/NQ-UBTVQH14 of July 24, 2017, on the 2018 oversight program of the National Assembly Standing Committee, and Resolution No. 424/2017/NQ-UBTVQH14 of August 23, 2017, establishing the Delegation to oversee the implementation of policies and regulations on management and use of foreign loans during 2011-2016;

Considering Report No. 309/BC-DGS of August 9, 2018, of the Oversight Delegation of the National Assembly Standing Committee, on the results of the oversight of the implementation of policies and regulations on management and use of foreign loans during 2011-2016;

RESOLVES:

Article 1.Assessment of results of the implementation of policies and regulations on management and use of foreign loans

The National Assembly Standing Committee basically agrees with Report No. 309/BC-DGS of August 9, 2018, of the Oversight Delegation of the National Assembly Standing Committee, on the results of the oversight of the implementation of policies and regulations on management and use of foreign loans during 2011-2016.

Given limited state budget revenues and great demands for development investment, the borrowing and use of foreign loans (including official development assistance (ODA) and foreign concessional loans) during 2011-2016 seemed quite necessary. This funding source is rather large and can help offset the deficit of the state budget for development investment and plays an important role in the building of infrastructure, socio-economic development, education, healthcare, culture, transport, agriculture and rural areas, and environmental protection, thus promoting transfer of technology and acquisition of advanced sciences, techniques and management experience of the developed countries in the world, creating jobs, and tapping potential resources of the economy. Borrowed foreign loans saw an increase of 59% compared to the last period, showing the support from the governments and international finance institutions for Vietnam as the country’s profile and prestige have risen. In order to have grounds for organizing and enhancing the management of foreign loans, the legal system has step by step been improved to be in line with guidelines and policies of the Party and State, thus satisfying the requirements on management and use of foreign loans. The management and use of these loans have recorded positive achievements. In general, foreign loan-funded projects are effectively operating with timely capital disbursement and gradual remediation of insufficient counterpart funds. Inspection, examination and audit activities have been intensified, thereby helping redress errors and violations and increase the effectiveness of a number of foreign loan-funded projects.

However, in the course of implementation, some shortcomings are revealed in the legal system and the management of foreign loans, including government-guaranteed ones. A number of legal documents have not been promulgated in time or fail to comply with international practices. Some projects have not had the loan repayment capacity as required or faced binding conditions set by donors which cause difficulties for their implementation and affect socio-economic efficiency. The formulation of plans and distribution and disbursement of loans have been sometimes delayed and failed to abide by financial disciplines. For some projects, counterpart funds have not been arranged sufficiently and promptly, or commitments with donors have not been fulfilled. The preparation quality and efficiency of some projects have remained low with backward technologies and a prolonged preparation period, resulting in increased total investment capital, non-consistency between component items and lack of linkage among regions and areas, thus reducing investment efficiency and causing waste of resources. The coordination among agencies, organizations and localities in project management has been relaxed. The inspection, examination, audit and supervision of the implementation of foreign loan-funded projects have not been carried out on a regular basis, particularly the evaluation of investment efficiency, while violations have not been handled promptly and strictly.

The above limitations, problems and shortcomings are attributable to both objective and subjective causes. The legal system remains incomplete, and the assignment of tasks and duties fails to combine the responsibility to borrow loans with the responsibility to pay debts while management and explanation responsibilities remain unclear. The awareness about the significance of foreign loans remains limited; there exists a view that foreign loans are granted for free so importance has not truly been attached to economical and effective management and use of these loans. The management capacity is not up to requirements and the organization of project implementation lacks professionalism; performance methods seem to be inappropriate while Vietnamese competent authorities fail to take the initiative in setting out specific evaluation criteria.

Article 2.Tasks and solutions

Given limited domestic funding sources and great demands for investment, it is necessary to mobilize more foreign loans for the 2016-2020 period and subsequent periods. To improve policies and regulations on, and bring into play the efficiency of, the management and use of foreign loans while strictly abiding by financial discipline, the National Assembly Standing Committee requests the Government to concentrate efforts on performing the following tasks and solutions:

1. To review the legal system and the implementation of the regulations on foreign loans. To further improve the regulations related to the mobilization, management and use of ODA and foreign concessional loans. To study, improve and soon submit to the National Assembly the revised Law on Public Investment in compliance with the Constitution and in consistency with the Law on the State Budget, Law on Public Debt Management, Bidding Law and other relevant laws; to ensure feasibility, publicity, transparency and equality in the implementation and raising of efficiency of the mobilization and management, proactive use of foreign loans within the responsibilities of ministries and localities, and compliance with international practices. To focus on directing the promulgation of guiding documents and organizing the implementation of the Law on Public Debt Management and relevant documents.

2. To formulate a strategy for mobilizing foreign loans in line with the national socio-economic development strategy and in conformity with the conditions and concessional level of funding sources for Vietnam as well as the debt payment capacity of the state budget and users of foreign loans. To step by step restructure the ratio of foreign loans to public debts, reserving foreign loans for the fulfillment of the objectives and tasks decided by the National Assembly. To concentrate foreign loans on large projects with spillover effects in essential and important sectors like response to climate change and natural disaster prevention and control, clean energy, transport, and hydraulic work, while rationally balancing and using other financial resources in order to set aside resources for socio-economic development investment, avoiding waste and inefficiency.

To administer the mobilization, management and use of ODA and foreign concessional loans through balancing foreign loans and domestic loans in a reasonable and effective manner while guaranteeing national interests in long and short terms. Loans are not permitted to exceed the overspending limit; to maintain the ceiling limit of state budget investments at VND 2 quadrillion in the 2016-2020 period and public debt safety indicators decided by the National Assembly, especially foreign loans of the Government.

3. To study and formulate criteria for receiving and using foreign loans and criteria for evaluating efficiency of projects using ODA or foreign concessional loans, thereby ensuring strictness, effectiveness and transparency in the conclusion of agreements; to review and exclude projects which are not really urgent or do not satisfy the conditions and criteria on socio-economic efficiency and debt payment capacity, particularly for projects subject to conditions unfavorable for Vietnam or those that are inefficient as compared to domestic loan-funded ones; to refrain from using loans to cover regular expenditures.

4. To handle the amount exceeding the ceiling level of VND 300 trillion of total investment from foreign loans under the National Assembly’s Resolution No. 26/2016/QH14:

a/ To direct the preliminary review and comprehensive and objective evaluation of 3 years’ implementation of the National Assembly’s Resolution on the medium-term public investment plan and the national financial plan for the 2016-2020 period, focusing on complete and accurate evaluation of the mobilization, signing of agreements and disbursement of ODA and foreign concessional loans, counterpart funds, and fund amounts not yet included in the 2016-2020 medium-term public investment plan, and proposing overall solutions to balance and regulate financial resources decided by the National Assembly for the remaining years of the 5-year plan (2019 and 2020), then report such to the National Assembly for consideration and decision at its 6^thsession (in October 2018).

b/ To direct related agencies to expeditiously evaluate the disbursement and efficiency of foreign loan-funded projects in accordance with law. Specifically, (i) for projects not yet put into performance thus unable to determine their efficiency, to suspend them for review and re-evaluation; (ii) for projects already put into performance, to carry out mid-term evaluation and find out problems and shortcomings for remediation; and (iii) for completed projects, to carry out comprehensive evaluation of their efficiency in accordance with the Law on Public Investment.

5. To direct the Ministry of Finance to assume the prime responsibility for, and coordinate with the Ministry of Planning and Investment, State Bank of Vietnam and related ministries and sectors in, negotiating and signing loan agreements; to raise the efficiency of disbursement, supervision and evaluation of the efficiency of projects. To promptly provide localities with information about donors, and fields of and conditions for allocation of ODA loans and concessional loans of every donor.

6. To modernize the management of foreign loans through upgrading information technology systems, ensuring the regular and prompt updating of information about negotiation, agreement signing, implementation and capital disbursement activities in order to detect problems for finding solutions.

7. To step up examination, inspection, audit and supervision activities according to their competence; to formulate a mechanism for prevention and control of corruption and waste in the management and use of foreign loans.

8. To direct ministries, sectors and localities to remediate violations and expeditiously redress problems arising over the past time and define responsibilities of collectives and individuals that let violations occur, causing loss or inefficient use of foreign loans. To effectively manage and use foreign loans in accordance with law.

Article 3.Organization of implementation

1. The Government, Prime Minister, ministries, ministerial-level agencies, government-attached agencies, and provincial-level People’s Councils and People’s Committees shall, within the ambit of their tasks and powers, direct and organize the implementation of this Resolution.

2. The Standing Committee, Committee on Financial and Budgetary Affairs, Ethnic Council and other Committees of the National Assembly, delegations of National Assembly deputies, National Assembly deputies, and People’s Councils at all levels shall, within the ambit of their tasks and powers, oversee the implementation of this Resolution.-

On behalf of the National Assembly Standing Committee
Chairwoman
NGUYEN THI KIM NGAN