ODA Disbursement Sees Challenges

The Ministry of Planning and Investment said the amount of nearly US$1.3 billion of ODA capital disbursed in the first five months of this year, or 52.5 percent of the full-year plan, is good news not only for the Vietnamese Government but also for international donors. According to experts, this is a special phenomenon because it is quite rare in the Vietnamese economic structure where the amount of ODA disbursement exceeds 50 percent of the full-year plan in just five months while it is just below 40 percent in the first half of other years. This impressive progress is largely contributed by the Government of Vietnam and closely supported by international donors. In the event that the Vietnamese economy is dealing with rising inflation, both sides have made positive moves to solve problems facing each project in the quickest and most proper manner; thus, the progress of disbursing this important capital source has made headway.

 

Not only making a breakthrough in ODA disbursement, the signing of credit agreements with international donors has also produced positive results. In the January - May period, a total US$1.66 billion worth of ODA capital was concluded, of which some US$1.633 billion was loans and over US$27.4 million was non-refundable aid. In addition, some important preferential credit agreements were signed by international donors and the Government of Vietnam. The Southeast Asian nation borrowed US$620 million from the World Bank (WB) for five projects involving health, sanitation, power distribution and others. It also reached an agreement with the Asian Development Bank (ADB) to borrow US$198 million for two water projects in Ho Chi Minh City. Prominently, the European Union (EU) is still regarded as one of leading ODA capital providers for Vietnam. In 2011, the EU remains a major donor with 680 million euro (or US$972.3 million).

 

Taking these figures into consideration, Vietnam catches the attention of international donors. However, under the angle of economic experts, there are still so many questions to ODA disbursement because in Vietnam because of its low rate in relation to other countries and to the demand of its economy. Besides, how to improve the aid efficiency is a critical issue.

 

Vietnam has been recognised the middle income country by the international community. This status will entail less concessional loans for Vietnam and force Vietnam to use this source of capital more effectively. Hence, economic experts pointed out that the Government should amend some contents in the Decree 131/2006/ND-CP on management and use of ODA capital because this policy has, in reality, revealed shortcomings, particularly the harmonization of processes and procedures with international donors. One amendment needed to be made is creating more favourable conditions for the private sector to access ODA capital in the public - private partnership (PPP) investment form. Recently, the government has turned a green light for private businesses to access to the ODA capital. This open mechanism of the Government is very timely and necessary as it showed the Government's appreciation for the dynamic and creative private sector. And, permitting private businesses to access ODA and other loans granted by international donors will strengthen attraction of aid sources.