Viet Nam: Supporting Project Financial Management Decentralization (Phase 3)

Sovereign Project | 39101-022

Summary

The TA will help the government enhance the efficiency of externally financed public investments and, in particular, strengthen the government's effective mobilization and utilization of ADB resources by (i) enhancing the capacity of government staff involved in project financial management, specifically in the financial preparation and appraisal of projects to optimize the utilization of borrowed funds and ensure debt repayment, and (ii) helping the government develop a manual on the financial management of ODA and less-concessional borrowing, as well as sector-specific guidelines on the financial preparation and appraisal of ADB-funded investment projects.

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Project Name Supporting Project Financial Management Decentralization (Phase 3)
Project Number 39101-022
Country Viet Nam
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8181-VIE: Supporting Project Financial Management Decentralization (Phase 3)
Technical Assistance Special Fund US$ 580,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector Public sector management - Decentralization - Economic affairs management
Gender Equity and Mainstreaming No gender elements
Description The TA will help the government enhance the efficiency of externally financed public investments and, in particular, strengthen the government's effective mobilization and utilization of ADB resources by (i) enhancing the capacity of government staff involved in project financial management, specifically in the financial preparation and appraisal of projects to optimize the utilization of borrowed funds and ensure debt repayment, and (ii) helping the government develop a manual on the financial management of ODA and less-concessional borrowing, as well as sector-specific guidelines on the financial preparation and appraisal of ADB-funded investment projects.
Project Rationale and Linkage to Country/Regional Strategy

Since Viet Nam's attainment of the status of a middle-income country in 2010, its access to traditional concessional official development assistance (ODA) has diminished. ADB and the government recognize, however, that continued growth and poverty reduction through the successful implementation of the 5-year Socio-Economic Development Plan, 2011 2015 will require costly structural reform and significant infrastructure investments to address bottlenecks. Faced with the increasing cost of finance and growing investment needs, the government need to improve the efficiency of externally financed public investments. This will entail improvements to the project financial management in the central government and local governments alike and enhanced external debt management that mitigates the risks of external borrowing.

Increasing the economic and social returns on public investments requires building the capacity of government officials responsible for the financial appraisal of investment projects. Currently, central and local government officials lack the capacity to conduct by themselves effective project financial analysis. To strengthen their ownership of projects and programs, they need to improve their knowledge and skills regarding project financial analysis, especially toward improving the efficiency and viability of proposed investments. Improving such knowledge and skills is also critical for government officials responsible for appraising and approving projects. Additionally, the lack of clear guidelines on project financial preparation and appraisal, and the fragmented legal framework for financial management during project implementation, further made it difficult for staff to properly and consistently conduct project financial management.

ADB's newly approved country partnership strategy 2012-2015 cites the strategic thrust to support Viet Nam's transition to status as an upper-middle income country through three pillars: inclusive growth, environmental sustainability, and improved efficiency. In line with the country partnership strategy, the TA will support the governement in more effective utilization of ADB resources through improved financial preparation and management of ADB-funded projects in Viet Nam.

Impact More effective utilization of ADB resources by the Government of Viet Nam
Project Outcome
Description of Outcome Improved financial preparation and management of ADB-funded projects in Viet Nam
Progress Toward Outcome Through a series of training courses and workshops held under the TA, responsible government officials at both central and local levels have better understandings of the requirements and procedures on financial analysis of investment projects funded by ADB and on financial management of ODA and less concessional funded projects.
Implementation Progress
Description of Project Outputs

1. Sector-specific guidelines on project financial preparation and appraisal for ADB-funded investment projects developed

2. Well-defined and streamlined manual on financial management of ODA and less-concessional borrowings developed

3. Skills and knowledge of government staff on project financial management enhanced, particularly regarding project financial preparation and appraisal

Status of Implementation Progress (Outputs, Activities, and Issues) The TA's draft products are being finalized. In response to the Government's additional request, the TA also supported the development and dissemination of a new circular on project financial management which was issued in December 2013. The planned training activities have been completed in October 2014. However, as of 3 October 2014, there is still TA's uncommitted amount of around $120,000 for the trainings, seminars, workshops, and studies. To optimize the use of TA funds to meet increasing demand for training activities in project financial management, the MOF proposed the Mission to consider the possibility for TA's extension from December 2014 to 30 June 2015, so that additional training courses on comprehensive and specific topics of project financial management could be further conducted. The MOF submitted official request for TA's extension and planned activities to be implemented under TA's extension for ADB's consideration. On 14 Nov. 2014, CD VRM approved the Extension of TA closing date until 30 June 2015, and reallocation of TA funds
Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Consultations with Ministry of Finance, other line ministries, project management units, and some international development partners were conducted during project design. An ADB fact-finding mission fielded from 21 March to 2 April 2012 to prepare TA reached an understanding with the government on the TA impact, outcome, outputs, implementation arrangements, cost, financing arrangements, and terms of reference of consultants.
During Project Implementation Consultations will be conducted with key stakeholders and other international development partners to discuss the TA products. Meetings with line agencies, local authorities, project management units at different levels will be organized to ensure a practical approach to generating TA products.
Business Opportunities
Consulting Services

The project will require the following consultancy service:

1. International Expert on Project Financial Management Team Leader (6 person-months, intermittent)

2. National Public Financial Management Expert (12 person-months, intermittent)

3. National Economist (8 person-months, intermittent)

Procurement Project will purchase some equipment includes computers, printers, and one photocopier.
Responsible ADB Officer Chu Thi Hong Minh
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Viet Nam Resident Mission
Executing Agencies
Ministry of Finance28 Tran Hung Dao
Ha Noi, Viet Nam
Timetable
Concept Clearance 12 Mar 2012
Fact Finding 21 Mar 2012 to 01 Apr 2012
MRM -
Approval 27 Sep 2012
Last Review Mission -
Last PDS Update 16 Dec 2014

TA 8181-VIE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Sep 2012 18 Dec 2012 18 Dec 2012 15 Dec 2014 30 Jun 2015 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
580,000.00 0.00 120,000.00 0.00 0.00 0.00 700,000.00 27 Sep 2012 549,608.53
Title Document Type Document Date
Supporting Project Financial Management Decentralization (Phase 3) Technical Assistance Reports Sep 2012

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