Vietnam aims for effective use of ODA sources

What’s message the Vietnamese government wants to convey donors attending 2010 CG meeting?

Vietnam’s economy will grow 6.7 per cent amid a strong economic rebound in 2010. However, stabilising the macroeconomy, particularly inflation, the exchange rate, trade deficit and balance of payments, are primary issues.

Therefore, on top of 2010 CG meeting agenda will be how to achieve macroeconomic stability and sustainable development both in the near term and in the next decade.

The National Assembly recently adopted the 2011 socio-economic development plan whose overall targets are to enhance macroeconomic stability, rein in inflation, reform the growth model and further transform the local economy’s structure.

Both socio-economic development draft plans for 2011-2015 and 2011-2020 all mention the country’s quick and sustainable growth targets in the coming period.

What will be key issues at the 2010 CG meeting?

Alongside macroeconomy concerns, key issues will include Vietnam’s opportunities and challenges as a low-end medium income nation, public management, transparency and operational efficiency of state economic sector, management and anti-corruption and Vietnam’s competitiveness.

At the meeting, the Vietnamese government and international donors also delve into prioritised issues for sustainable development such as how to protect the environment in the face of fast economic development or adopt more strategic approaches in accessing aid packages for combating climate change. The future of partnership relations after Vietnam grows into a medium-income nation will also be discussed.

International donors pledged to offer Vietnam an ODA record of more than $8 billion in 2009. What will be this year’s figure?

Amid the global economic recession, over $8 billion of 2009 committed capital reflected donors’ confidence in Vietnam’s growth potential and commitment to accompany the country during the course of socio-economic development.

To ensure the economy growing at around 7-7.5 per cent and put into place a modern and integrated infrastructure system Vietnam needs to attract an investment amount equal to 40 per cent of its gross domestic product within the next five years, with 30 per cent of which coming from overseas sources.

However, as Vietnam is now a medium-income nation, the size of aid packages, support structure as well as approach methods will change. Therefore, we should not expect a year-on-year growth in ODA amount, but should focus on how to use it effectively. The exact amount for 2010 will be unveiled on December 8 when the meeting wraps up.

ODA is not a grant so it may badly affect the country’s public debt. What do you think?

ODA may add to sovereign debt. However, most ODA is long-term debt of up to 30 years, including some grace years and featuring low interest rate.

With restricted local capital sources, we need to seek financial support from international donors. Reality shows that big transport infrastructure projects such as Hanoi’s Thanh Tri Bridge, Quang Ninh province’s Bai Chay Bridge or the Hanoi-Lao Cai Expressway were built using ODA sources. ODA is not a grant, so that we must think of using the aids effectively.