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New policy in Vietnam on management and use of ODA and preferential loans

15:58 | 28/05/2020

Decree No. 56/2020/ND-CP on management and use of official development assistance (ODA) and preferential loans of foreign sponsors has just been issued by the Government on May 25, 2020. 

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new policy in vietnam on management and use of oda and preferential loans
New decree on use of ODA has just been issued (Photo: Project Life Mastery)

According to Financial Magazine, from May 25, 2020, the following programs will be given priority to use ODA and preferential loans:

Firstly, non-refundable ODA to be used to implement socio-economic infrastructure development programs and projects; strengthen ability; support policy, institutional and reform development; prevent and mitigate disaster risks and and adapt to climate change; ODA used for social security; ODA to prepare investment projects or co-finance projects.

new policy in vietnam on management and use of oda and preferential loans
The decree stipulates the management of ODA and preferential loans (Photo: Vietnam Economic News)

Secondly, ODA loans to be used for programs and projects in the fields of health, education, vocational education, climate change adaptation, environmental protection and essential infrastructure. 

Thirdly, preferential loans to be used for re-lending projects according to the Government's law; programs and projects funded by the state budget in the field of socio-economic infrastructure development.

Fourth, other priority cases complying with the Prime Minister's decision to attract, manage and use ODA and preferential loans from time to time.

new policy in vietnam on management and use of oda and preferential loans
The Decree shall take effect since May 25, 2020 (Photo: Vietnam Explorer News)

In addition, the Decree also stipulates three principles for applying domestic financial mechanism to ODA and preferential loans:

Firstly, for programs and projects that fall within the central budget's spending tasks: to allocate all ODA loans and foreign preferential loans from the central budget.

Secondly, for investment programs and projects under the local budget spending task: Re-borrowing part or all of the ODA or foreign preferential loan capital from the central budget according to the provisions of law.

For programs and projects funded as the public-private partnership (PPP) projects: Re-borrowing all capital ODA loans, foreign preferential loans from the central budget in accordance with the law.

Thirdly, for programs and projects that are capable of recovering all or part of the capital: Re-lending all or part of ODA or foreign preferential loans from the central budget in accordance with the law.

According to the Decree, ODA and preferential loans shall not be used for regular expenditures, car purchase, or payment of site clearance costs.

The Decree shall take effect since May 25, 2020, replacing Decree No. 16/2016/ND-CP dated March 16, 2016 and Decree No. 132/2018/ND-CP dated October 1, 2018, reported by VGP News. 

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Candy Lee