To rectify and strengthen the management of advances in public investment capital in Vietnam

To rectify and strengthen the management of advances in public investment capital in Vietnam (Image from the internet)

On July 12, 2024, the Prime Minister of Vietnam issued Directive 20/CT-TTg concerning the rectification and enhancement of the management of advances in public investment capital sourced from the state budget by Ministries, central agencies, and localities.

Prime Minister of Vietnam's request: rectifying and strengthening management of advances in public investment capital

According to Directive 20/CT-TTg for the year 2024, as of January 31, 2024, the overdue advance amount from the State Budget (NSNN) of Ministries, central agencies, and localities remained relatively large, approximately VND 7,454 billion (including: Ministries, central agencies around VND 1,279 billion, localities around VND 6,175 billion), reducing the efficiency of state budget capital utilization.

The National Assembly has instructed the Government of Vietnam to: “Strictly manage state budget carryover expenditures and resolve overdue advance cases that have been prolonged for many years.”

To rectify and overcome the existing issues in the management of state budget advance capital as in the past, urgently recover the overdue advance balances, and ensure that future capital advances are proper, purposeful, targeted, and effectively used, preventing the emergence of overdue advances, the Prime Minister of the Government of Vietnam demands certain measures from Ministries, central agencies, localities, investors, and project management boards, including the following:

- Based on current legal regulations, strengthen the strict and effective management of advance capital according to standards; take responsibility in the synthesis, monitoring, and direct guiding of investors for adherence to the management, advance of public investment capital sourced from the state budget within the assigned capital plan.

- Conduct regular and irregular inspections to rectify and address arising issues during the execution process by investors.

- Review the provisions on capital advances in signed and ongoing contracts to ensure compliance with the law on management and advance contracts (advance guarantee procedures, terms of advance guarantees; terms for advance recovery...); tightly and effectively manage, and use advance capital for the correct purposes and subjects as stipulated by the contract. Closely monitor the validity periods of advance guarantees by credit institutions to ensure that the validity period of contract advance guarantees is extended until investors have fully recovered the advance amount.

- For ongoing projects with remaining unrecouped advances: continue monitoring, urging units to promptly execute, and accept completed volumes to recover advance capital, ensuring full recovery when the disbursement value reaches 80% of the contract value (except for cases where a higher advance level is permitted by the competent authority).

- Direct investors and project management boards, for ongoing projects with remaining unrecouped advances: continue monitoring, urging units to promptly execute, and accept completed volumes to recover advance capital, ensuring full recovery when the disbursement value reaches 80% of the contract value (except for cases where a higher advance level is permitted by the competent authority).

- The Ministry of Finance is responsible for periodically (biannually and annually) urging Ministries, central agencies, and localities to take measures to recover overdue advance capital for projects managed by Ministries, central agencies, and localities as per regulations.

More details can be found in Directive 20/CT-TTg in 2024.

Le Nguyen Anh Hao

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE