The Government issues Decree 114 on using ODA and foreign concessional loans

The content of Decree 114 is as follows:

- Grant ODA capital shall be prioritized for implementing the programs and projects on socio-economic infrastructure development.

- Capacity building.

- Supporting development ò the policies, institutions and reform.

- Preventing natural calamity, disease, mitigating disaster risks.

- Adapting climate change.

- Green growth.

- Creative innovation.

- Social Security.

- Preparing investment projects, or co-financing the projects with concessional loans in order to increase the preferential component of loans.

- ODA loans will be prioritized for programs and projects in health, education, vocational training, climate change, environmental protection, and essential infrastructures without a direct economic capital recovery.

- Preferential loan capital shall be prioritized for the on-lending programs and projects in accordance with the law on ODA, foreign concessional on-lending loans of the Government; programs and projects with the State budget expenditure in the socio-economic infrastructure development.

In addition, other priority cases shall be implemented according to the Decision of the Prime Minister on the orientations to attract, manage and use ODA and concessional loans from foreign donors in each period.

The Decree also clearly states the state management of ODA and concessional loans, including:

- Developing, promulgating and organizing to implement the legal documents on managing and using ODA and concessional loans.

- Developing and organizing to implement the projects on attracting, managing and using ODA and concessional loans in each period to support the 5-year socio-economic development plan.

-Implementing the solutions and policies for effectively managing and using these capital sources.

- Monitoring and providing information on managing and using ODA and concessional loans.

- Supervising, evaluating, examining and inspecting the situation and results of managing and using ODA and concessional loans in accordance with the regulations of the laws.

On the basic principles in state management of ODA, concessional loans that used for development investment, not for regular expenditure and for activities on capacity building training, without the cases for handing over the technology, equipment machinery operation skills

The Government unifies the state management of ODA and concessional loans on the basis to ensure the efficiency of using capital loans and ability to repay debts; to implement devolving associated with responsibilities, powers and capacities of the ministries, central and local agencies to ensure coordination in management, supervision and evaluation of relevant agencies in accordance with current regulations of the laws.

In parallel situation, it is necessary to ensure publicity, transparency and promote explaining policies, orders and procedures for mobilizing, managing and using ODA and concessional loans among sectors and fields and localities, The government also cares about situation implementing and result of using ODA and concessional loans. The Government Portal (chinhphu.vn; mpi.gov.vn; mof.gov.vn; mofa.gov.vn) should proclaim information about cooperation policies, preferential fields of the foreign donors. At the same time,

At the same time, preventing corruption, losses and waste in managing and using ODA and concessional loans, and precluding and handling these acts in accordance with the regulations of the laws will be paid attention.

The Decree 114 also clarifies the principle of applying domestic financial mechanism to ODA and concessional loans. Specifically, for programs and projects with central budget expenditure as to issue all ODA, foreign concessional loans from the Central budget.

For the programs and projects with the local budget expenditure using ODA (borrowed by a part or borrowed by total ODA) and foreign concessional loan it is implemented in accordance with the regulations of the law on ODA re-lending.

For the programs and projects with an ability to recover total or part of the capital, it is re-lending of total or a part of ODA, foreign concessional loans from the central budget in accordance with the regulations of the law on re-lending foreign loans of the Government.

For the grant ODA including grant ODA connected with the loan, grant ODA for investment, technical assistance projects (independence, preparing, assistance for implementing investment projects), non-projects, allotment mechanism should be applied.

The Decree 114 stipulates jurisdiction to decide investment policy for the national target programs, important programs and public investment programs using ODA, concessional loans, implemented in accordance with the regulations given in Clause 1, Article 17 of Public Investment Law.

The Prime Minister decides investment policy for the following programs and projects:

Firstly, the programs and projects using ODA and concessional loans, except the programs and projects stipulated in Clause 1 of this Decree.

Secondly, the programs and projects using grant ODA in groups A and B, programs and projects connected with policy framework, national defense, security, religious projects, the programs assessing sectors, procuring goods with permission of the Government.

Thirdly, the technical assistance projects using ODA, foreign concessional loans for preparing investment projects. In this case, the head of organization in charge decides investment policy for the projects using the grant ODA belonged group C.

Regarding the O Mon 3 power project, invested by Electricity of Vietnam (EVN) using Japanese ODA loans, the procedures for submitting, appraising, approving investment policies been blocked and stopped for 4 years ago (since the time when EVN Member Council submitted the pre-feasibility study report to apply for approving the investment policy, but the Ministry of Planning and Investment and the state management levels could not identify the competent agency for project appraisal and approval, and could not define the appraisal process). Today, the Government issued Decree 114/2021/ND-CP including the Clause 53 in Chapter VI, where approval to the investment policy is defined:

1/ The jurisdiction to approve investment policy shall comply with the clauses 30, 31, 32 of the Investment Law.

2/ Documents, order and procedures for approving investment policies comply with the clauses 33, 34, 35 and 36 of the Investment Law.

Thus, EVN and the ministries and agencies have a legal basis for submitting, appraising and approving the investment policy on O Mon 3 power plant, removing the 4-year bottleneck for this procedure.