ODA to be Used more Effectively and Transparently

In fact, the Ministry of Planning and Investment has developed a project on attracting and using ODA capital for the 2006-2010 period. The project aims to depict the Government’s attraction and use of ODA capital, creating favourable conditions for donors to combine their support with priorities at national, organisational and regional levels. The project consists of principle guides on the attraction and use of ODA capital, the Government-prioritised fields for ODA capital use, and policies and measures to improve the effectiveness of ODA capital. The project is fully aware of the spirit of the Hanoi Commitment on the aid effectiveness and is based on commitments of governments and donors to create bigger impacts of ODA capital.

 

The Ministry of Planning and Investment said that the next five year plan required a high investment to promote economic growth and poverty reduction. It is estimated to achieve targets of the five year plan 2006-2010 Vietnam should have US$10.9 billion in ODA capital with US$2.2 billion disbursed each year (the 2005 disbursement was estimated at US$1.7 billion. Total ODA capital which has not been disbursed yet is around US$8 billion. The figure will be transferred to ODA capital to be disbursed in the coming years.

 

According to preliminary estimates, total ODA international donors pledged to provide Vietnam in the next five years is between US$16 billion and 18.2 billion. This figure comes from initial commitments of donors. The attraction of ODA capital, however, will depend on the meeting of donors’ requirements to increase ODA for the implementation of Millennium Development Goals (MDGs). Some major donors have tended to shift their aid to Africa, resulting in a reduction of ODA capital for East Asia in case that ODA for the world does not increase.

 

Under the project, the fields which have been prioritised to use ODA capital in the 2001-2010 period mainly concentrate in agricultural and rural development, including agriculture, irrigation, forestry and fisheries, in combination with poverty reduction, capitalised at between US$2.2 billion and 2.5 billion (equal to 18 per cent); economic infrastructure development, valued at between US$3.6 billion and 4.1 billion (accounting for 30 per cent); social infrastructure development, including health care, education and training, population and development, environmental and natural resources protection, institutional capability building, and human resources development, capitalised at between US$4.3 billon and 4.9 billion (equal to 36 per cent); energy and industry, valued at US$1.9 billion and 2.2 billion (accounting for 16 per cent).

 

Non-refundable ODA capital will be mobilised in the next five years and used in projects, without the need of paying it back, particularly providing direct support to the poor and providing technical support, consisting of development research, capability building for projects which use ODA capital, thus helping reduce loans of the Government. ODA capital and loans with soft interests will be prioritised for socio-economic infrastructure development. A proper portion of the loans will be used for developing small and medium-sized socio-economic infrastructure works. However, the financial effectiveness and refunding solutions will be analysed carefully. Other ODA loans, especially loans with less preferential terms, will be used for socio-economic infrastructure works which have high economic and financial effectiveness.

 

The Vietnamese Government hopes that the donors will promote their support, helping Vietnam to gain a high economic growth, reduce poverty and achieve MDGs. Hence, policies and mechanisms on using and managing of ODA capital have been developed in accordance with the principles and commitments in the Hanoi Commitment. Accordingly, the Vietnamese Government would continue to perfect a legal environment for attracting and using ODA capital, perfecting domestic financial policies for ODA capital, including policies on debt management, conditions for loan refunding of profitable projects, and improving policies on tax of ODA projects. Furthermore, the Government will improve the quality of ODA capital by encouraging autonomy of beneficiaries in preparing content of programmes and projects, using further consultancy services of local agencies, and promoting capability for project development and evaluation. In particular, the Government’s system on public buying, public financial management, environmental production and social livelihood will be perfected.