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|The La Son-Tuy Loan expressway. Photo: Da Nang Newspaper|
According to the Ministry of Finance’s report sent to the National Assembly in May, no new project guarantees were provided from January 1, 2019, to March 30, 2020. Thanks to the tightened management of government guarantees, guaranteed loans continued to fall last year, down 8.1% against 2018.
However, the Prime Minister has recently asked the Ministry of Finance to advance US$51.93 million from the accumulation fund for debt repayment so that the Ministry of Transport can repay the loans used for the two projects of the La Son-Tuy Loan expressway (US$33.12 million) and the National Highway 20 upgrade (US$18.8 million).
The Government insists that the Ministry of Transport should fulfill debt obligations and repay the aforementioned loans and the US$746-million advanced last year within this year. Besides, the Ministry of Transport and the Ministry of Planning and Investment must set aside sufficient capital to pay off the loans on time.
As for the La Son-Tuy Loan expressway project, part of Ho Chi Minh Road, site clearance has yet to be completed. The project, with a total investment of over VND11,000 billion, is being financed by the Bank of Tokyo-Mitsubishi UFJ.
Meanwhile, the upgrade of National Highway 20, the road connecting HCMC and Dalat, aims to facilitate the Tan Rai and Nhan Co bauxite projects. The project has an adjusted investment of VND5,264 billion and is financed by Sumitomo Mitsui Banking Corporation and a syndicate of lenders.
The Ministry of Finance has made advance payments to repay loans from March 2018 to March 2019 at these two projects (US$194.2 million), and the Ministry of Transport has repaid them in part.
The two projects are not the first transport infrastructure projects to use the accumulation fund for debt repayment or public investments instead of government guarantees.
In 2013-2014, the fund helped repay the bond debts of VEC and the loans of the Hanoi-Haiphong expressway project.
According to the National Assembly Committee for Finance and Budget in 2016, such loan repayments are against the law of the State budget and the Constitution.
At a meeting on loan borrowing and repayment in June 2019, Vo Huu Hien, deputy director of the Department of Debt Management and External Finance, said the fund had advanced some VND18,000 trillion.
In recent years, the Government had to repay almost US$100 million. However, with cement, oil and gas and air transport projects, the Government has stopped providing guarantees and debt repayments.
Since 2018, the Government has given guarantees to two power transmission projects with a combined value of US$1.6 billion and no new guarantees to domestic enterprises. This means that despite no new guarantees, the repayment of old loans still remains, posing risks for the budget.
According to the department, there are risks concerning public debt safety, such as a third of debts needing to be repaid in 2020-2021. Interest rates and terms will increase the country’s debt repayment obligations in the years to come.
However, as Minister of Planning and Investment Nguyen Chi Dung said to the National Assembly in May, the amounts allocated to the medium- and long-term public investment plan could only resolve problems at old projects. Of the 9,600 ongoing projects, there are up to 8,000 old projects and 400 new projects. Though the transport ministry has spent significantly on repaying debts, it still has over VND20,000 billion left unpaid.
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