Adding on the conditions for extending the capital plan implementation period
Concerning the handling of the central budget's investment capital plan, which is not fully disbursed annually and cannot be extended, the Ministry of Planning and Investment (MoPI) has proposed to amend Clause 4, Article 44 of Decree No. 40/2020/ND-CP in the direction of the amount of capital not fully disbursed in the planning year, not reducing the medium-term public investment plan, and allowing ministries, central agencies, and localities to extend the implementation period.
|The Ministry of Finance has proposed amending and supplementing many regulations in order to increase the effectiveness of public investment. Photo: TL (illustration)|
According to the MoF, this proposal may pose a risk to the development of State budget estimates and management, particularly the arrangement of State budget balance, deficit control, and public debt management.
As a result, the MoF has proposed adding the implementation conditions. Particularly, ministries, branches, and localities must review and limit the start of new projects to prioritize the allocation of capital for projects that are behind in capital disbursement from the prior year to the following year; only allocate capital within the assigned estimates next year. Simultaneously, the State budget estimates for the following year do not plan to "offset" the previous year's delayed disbursement and cancellation.
Because this capital source has a disbursement method by special account, there will be a special account balance from time to time, whether this amount is considered not fully disbursed and canceled, the MoF has requested the MoPI to clarify the mechanism and time when ministries and localities report the amount of canceled capital to the State Treasury and financial agencies.
Furthermore, in Clause 2, Article 68 of the Law on Public Investment 2019, the implementation and disbursement period of the annual financial plan is extended up to January 31 of the following year in cases where the implementation and disbursement of the annual state budget investment plan are extended. In the event of force majeure, the Prime Minister shall decide on the central budget capital, and the provincial People's Council shall decide on the local budget capital, with the implementation period being extended but not exceeding 31st December of the following year.
In addition, Clause 1, Article 48 of Decree No. 40/2020/ND-CP stipulates seven cases of capital extension. However, according to the State Audit Office of Vietnam's opinion on the State budget settlement report 2021, many cases are not "force majeure" under the provisions of the Law on Public Investment. For example, in the case of ministries, and central and local agencies, there is only one project in the year of national important plans and projects; projects on compensation, support, resettlement, and site clearance; projects on overseas Vietnamese representative offices and other agencies.
Bullet point Đ, Clause 1, Article 48 states that the projects that are affected by natural disasters, epidemics, and objective causes that are unforeseeable and irreversible despite all necessary measures are allowed to extend the implementation period and disbursement of the annual public investment plan. However, there are no regulations governing the nature of these projects at the competent level.
Therefore, the MoF has requested that the MoPI review, amend, and clearly define the content of "force majeure" in accordance with the provisions of the Law on Public Investment, as well as study and supplement regulations on entities competent to decide on projects under the above criteria to attach management entities' responsibilities.
Adding on the case of capital plan disbursement extension
Concerning the extension of the implementation period and disbursement of the annual state budget investment plan, the MoF stated that Clause 1, Article 48 stipulates the cases for public investment capital allocated to the project and the draft Decree amending and supplementing the cases for tasks (investment preparation and planning). Nevertheless, there are no regulations on capital that are not allocated through the project, such as capital for granting preferential credit interest rates, management fees, and charter capital granted to policy banks and non-budget state financial funds.
As a result, the MoF has requested the MoPI to investigate and supplement the case where it is permitted to extend the implementation period and disburse the capital plan to the following year for the funding of policy banks and non-budgetary state financial funds under the provisions of the Law on Public Investment.
Furthermore, granting capital to offset preferential credit interest rates, management fees, charter capital for policy banks, and charter capital for non-budget state financial funds is a specific source of public investment capital, used annually for all activities of the bank and the fund with no specific division based on progress and implementation period as other conventional public investment projects.
Funding is determined by the demand for and efficiency of capital use, with capital demand being highly dependent on objective factors (such as market interest rates, customer borrowing needs, and so on).
As a consequence, the addition of regulations on extending the implementation period and disbursement of capital plans to policy banks and non-budgetary state financial funds will ensure flexible adjustment of capital sources, avoiding the accumulation of allotted estimates in the year when the capital of the unit is not effectively used.
Moreover, the MoF requests clarification from the MoPI on whether the capital plan extension for projects funded by ODA and concessional loans applies to counterpart funds. In fact, after the disbursement of ODA and concessional loans, counterpart funds are sometimes still allocated for work items.