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Vietnam Today

ODA to fall over time

Released at: 19:44, 07/08/2015

ODA to fall over time

Symposium hears of results and shortcomings in ODA use but notes financial source will decline as Vietnam becomes a low to middle-income country.

by Hung Nguyen

On the morning of August 7 the Vietnam Central Economic Committee (VCEC), with support from the Bank for Investment and Development of Vietnam (BIDV), held an international symposium entitled “Attracting and Utilizing ODA in Vietnam: a 20 Year Review”.

“During the 20 years there has been $3 billion in official development assistance (ODA) signed every year,” Mr. Vuong Dinh Hue, Chairman of VCEC, told the gathering. “This has been a significant financial source in supporting Vietnam’s economic reform and socio-economic development. It has contributed greatly to enhancing the capacity of Vietnam’s public services, transport infrastructure, energy, health, and education, supported agriculture development and poverty reduction, enhanced the environment, mitigated natural disasters, and assisted in adapting to climate change.”

Despite these positive results, however, there have been many weaknesses in terms of managing ODA. Disbursement remains tardy, at around 63 per cent of commitments. Many ODA projects have proven to be impractical. Public investment and ODA are still insufficient, affecting the stability and safety of Vietnam’s public debt and foreign debt. Finally, the management of ODA projects has at times manipulated regulations of Vietnam and of donors.

In the 2016-2020 period and towards 2030 Vietnam’s demand for capital is huge but public debt and the budget deficit continue to increase and ODA will decline as Vietnam becomes a low to middle-income country, raising questions about how the country will use ODA sources in the future.

Mr. Nguyen Duy Son from the World Bank (WB) said that concessional loans will be cut further, with non-concessional loans accounting for the majority of ODA to Vietnam. The WB therefore suggests the elimination of inefficient activities such as study tours and the promotion of capacity building for projects with clear objectives.

The WB will also focus more on non-revenue generating sectors such as health, education, social protection, and targeted poverty reduction.

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