New provisions of Decree No. 16/2016/ND-CP (replacing Decree No. 38/2013/ND-CP) on Management and Utilization of Official Development Assistance (ODA) and Concessional Loans of concessional loans Foreign Donors

Posted at: MONday - 15/08/2016 15:11 - post name: Cộng tác viên

 
Economic achievements of ODA fund – source: From the Internet

Economic achievements of ODA fund – source: From the Internet

On 16 March 2016, the Government issued Decree No.16/2016/ND-CP on Management and Utilization of Official Development Assistance (ODA) and Concessional Loans of Foreign Donors concessional loans as a replacement for Decree No. 38/2013/ND-CP dated 23 April 2013.

Decree No. 16/2016/ND-CP provided for many new provisions on establishing a complete process from receipt, management, utilizing, monitoring and evaluation of ODA fund and concessional loans, reducing the burden of administrative procedures for governing bodies, especially in technical assistance projects and non-project aids, compared to the Decree No. 38/2013/ND-CP. This article will focus on analyzing new provisions of Decree No. 16/2016/ND-CP in comparison with Decree No. 38/2013/ND-CP on the process of mobilization, receipt, management and utilization of ODA fund and concessional loans for technical assistance projects and non-project aids.

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Source: From the Internet

  • In terms of general provisions (Chapter I, Decree No. 16/2016/ND-CP)

For compliance with the Law on Public Investment of 2014 and changes in the policies on investment attraction of the Party and the State in the current period, some new contents and concepts of the Decree have been supplemented and specified as follows:

- Expanding the concept of foreign donors: As stipulated in Decree No. 38/2013/ND-CP, foreign donors comprise foreign governments, international organizations, intergovernmental organizations or inter-state organizations. However, the fact has shown that there have been many cases where Foreign Governments provide ODA fund and concessional loans through government organizations. Therefore, , Decree No. 16/2016/ND-CP has supplemented "government organizations authorized by foreign governments" in the concept of foreign donors in Article 1 of the Decree.

- Supplementing a new concept "report on the proposal of the investment policy". As stipulated in the Law on Public investment, ODA fund and concessional loans are public investment. As a result, as well as for other public investment sources, the governing body must prepare pre-feasibility research report (for national importance projects and group A projects) and report on the proposal of investment policy (for other programs and projects, including technical assistance projects and non-project aids) as a basis for decision on the investment policy by the competent authorities. This is a new concept used to replace the concept of Program outline in Decree No. 38/2013/ND-CP.

- Clarifying the concept of "non-project aid": Unlike the Decree No. 38/2013/ND-CP, Decree No. 16/2016/ND-CP stipulates expansion of and supplement to specific criteria for identification of non-project aids, including (i) the method of providing ODA grant; (Ii) in the form of individual grants, not constituting a specific project; (iii) being provided in cash or in kind, goods, experts, conferences, seminars, training, research, survey, training.

- Provision on more focus on priority areas of utilizing ODA fund and concessional loans of foreign donors: In order to address the issue of listed, scattered and dispersed provisions on the priority areas of utilizing ODA fund and concessional loans in Decree No. 38/2013/ND-CP which results in ineffective and improper use of capital, Decree No. 16/2016/ND-CP has provided for 06 priority areas utilizing ODA fund and concessional loans in Article 5. The group of these areas represents the Government's policy to focus on utilizing ODA and concessional loans in three strategic breakthroughs of the economy and other areas of great importance to create maximum multiplier effects in the use of these funds.

- Specific orientation to use ODA fund, concessional loans, and counterpart fund: Decree No. 16/2016/ND-CP supplements specific guidelines in utilization of ODA fund, concessional loans and counterpart fund. Accordingly, ODA grants is prioritized to be used for assistance in policy development, institutional development, human resource enhancement and people’s life improvement, etc, ODA fund is used to support programs and projects whose capital cannot be directly recovered and included in expenditures of the State budget; concessional loans are prioritized to be used in implementation of programs and projects whose capital can be recovered. As such, programs and projects with the target of supporting policy, institutional and professional research and human capacity building of the Ministry of Justice will be included in the list of priority programs and projects utilizing non-refundable ODA grant under provisions of this Decree.

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Source: From the Internet

 

2. On the process of mobilization, management and utilization of ODA fund and concessional loans of donors (Chapter II, III, IV, V of Decree No. 16/2016/ND-CP)

Compared to Decree No. 38/2013/ND-CP, Decree No. 16/2016/ND-CP clearly defined the process of management and utilization of ODA fund and concessional loans under the method of programs and projects and non-project aids, specifically:

2.1 Mobilization of ODA fund and concessional loans (Article 11)

Inheriting the provisions of Decree No. 38/2013/ND-CP, while expanding and clearly defining the responsibilities of the agencies in mobilizing ODA fund and concessional loans, Decree No. 16/2016/ND-CP specified 06 foundations as a basis for mobilizing ODA fund and concessional loans in clause 1. These foundations are established to ensure economic, social, environmental effectiveness and in compliance with the Law on public investment, performance capacity and contribution to the safety of public debt. Besides, the Decree has institutionalized forms of mobilization of ODA fund and concessional loans including organizing conferences and forums of capital mobilization at the national, inter-sector and regional level (clause 2); organizing conferences, forums or partnership groups on specific areas to mobilize ODA fund and concessional loans at the ministerial, branch and local level (Clause 3.4).

2.2 Preparation, evaluation, decision on investment policy of programs and projects (Chapter II)

- Regarding the power to make decision on investment policy of programs and projects

Decree No. 38/2013/ND-CP provided for two subjects having the power to approve List of sponsors of programs and projects, i.e. Prime Minister and the governing body. However, to ensure conformity with the provisions of the Law on Public Investment, Decree No. 16/2016/ND-CP increased the subjects having power to make decision on investment policy of programs and projects to 4 subjects, including the National Assembly, the Government, the Prime Minister and the head of the governing body.

In addition, Decree No. 16/2016/ND-CP also considered characteristics of ODA grants, including situation of sharp decrease in these grants, no large-scale projects, simple nature and quick implementation (such as support for organizing conferences and workshops, supply of consultants, support for capacity building training), a broader decentralization is made to the governing body to make decision on investment policy of programs and projects utilizing ODA grants of group C (except for programs and projects in sensitive areas such as policy, security, defense, religion ...) and the technical assistance projects with funds of less than US$ 2 million. Thanks to this provision, sequence, procedures for decision on investment policy of programs and projects utilizing ODA grants have been more streamlined than those applicable to loans.

- Regarding the process of proposal and selection of the Proposal of programs and projects utilizing ODA fund and concessional loans: Decree No. 16/2016/ND-CP has established a separate selection process for programs and projects utilizing ODA fund and concessional loans. Specifically, the Prime Minister will consider and decide to select the Proposal of programs and projects submitted from local ministries and localities, rather than the Ministry of Planning and Investment in accordance with Decree No. 38/2013/ND-CP.

- Providing for separate provisions on sequence and procedures of investment policy decisions for technical assistance projects, non-project aids under the jurisdiction of the head of the governing body. Accordingly, after preparing the report on the investment policy, the governing body should submit it to the Ministry of Planning and Investment for appraisal. Then, the governing body will make decision on the investment policy based on appraisal of the Ministry of Planning and Investment. Thus, compared to the Decree No. 38/2013/ND-CP, some administrative procedures applicable to technical assistance projects, non-project aids under the jurisdiction of the head of the governing body have been reduced because these are small-scale and non-sensitive projects.

2.3 Preparation, appraisal, investment decision of programs and projects (Chapter III).

Similar to the sequence, procedures for preparation, appraisal, decision of investment policy of programs, projects, they have been remarkably streamlined, especially for technical assistance projects and non-project aids under the jurisdiction of approval of the governing body. Specifically, for technical assistance projects and non-project aids under the approval of the governing body, the governing body will not make appraisal of documents of programs and projects, but based on Decision on investment policy to approve documents of the projects and non-project aids and investment decisions. This provision has reduced the burden of administrative procedures for the governing body, shortened implementation time, but raised the responsibility of the head of the governing body in making decisions on programs and projects.

2.4 Signing international agreements on ODA fund and concessional loans (Chapter IV)

Decree No. 16/2016/ND-CP has established a separate procedure where the parties signed agreements on ODA fund and concessional loans. In general, sequence and procedures for signing, amendment, supplement, extension of international treaties, agreements on ODA fund and concessional loans are defined by reference to the law on international treaties and management of public debt for conformity in the context that Law on signing, accession and implementation of international agreements are under amendment.

2.5 Management of implementation of programs and projects (Chapter V)

The new contents of Chapter include:

- Specifying the forms of organization of managing programs and projects and assigning the competent person to choose one of the forms of managing programs and projects based on the scale, nature and conditions of implementation of programs and projects.

-  Stipulating cases that Project Management Board has not been established to take advantage of and make maximum use of capabilities of the current Project Management Board, the governing body and the project owners to self-management of programs or hire consultants for management of programs and projects.

- Providing for new provision on "Preparation and approval of implementation plan of programs and projects utilizing ODA fund, concessional loans, 5-year medium-term counterpart fund to ensure compliance with the Law on Public Investment; and further specifying the tasks and powers of the governing body in preparation and approval of master plans and annual implementation plans of programs and projects that have been stipulated in Decree No. 38/2013/ND-CP.

- Supplementing ODA fund, concessional loans from foreign donors to counterpart funds. This is a new provision allowing the utilization of ODA fund and concessional loans as counterpart funds under decision of the Prime Minister.

 

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Economic achievements from ODA fund – source: From the Internet

3. On state management of ODA fund and concessional loans (Chapter VI of Decree No.16/2016/ND-CP)
Chapter VI of the Decree specifies and provides for many new provisions on state management of ODA fund and concessional loans. Besides, the Decree also clearly defines the functions, duties and powers of the Ministry of Planning and Investment, Ministry of Finance, Ministry of Foreign Affairs, Ministry of Justice, the State Bank of Vietnam, the Government Office, ministerial-level agencies, Government agencies and provincial people's Committees in state management of ODA fund and concessional loans.

Compared to Decree No. 38/2013/ND-CP, Decree No. 16/2016/ND-CP has facilitated and reduced the burden of administrative procedures for the governing body in the process of receipt, management and utilization of ODA fund and concessional loans from donors. In particular, the implementation of international legal cooperation under Decree No. 16/2016/ND-CP has also been remarkably streamlined in accordance with provisions of Decree No. 113/2014/ND-CP of the Government on management of international legal cooperation. 

Author: International Cooperation Department of MOJ
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