Vietnam to tighten ODA management and use
Vietnam will boost the re-lending of official development assistance (ODA) and restrict ODA grants to localities as a way to tighten control over this foreign loan.
The government has recently issued a decree on re-lending of preferential foreign loans to provincial people`s committees. The decree is scheduled to be implemented from June 15. At a recent meeting of the government on the issue, Nguyen Xuan Thao, the Ministry of Finance’s Deputy Head of the Debt Management and External Finance Department, said the decree was a way to prepare for Vietnam to stop receiving preferential ODA from many donors. The World Bank has announced it would stop offering preferential ODA to Vietnam from July 2017 as the country reached lower middle-income status. After that, the country must access less preferential loans. Meanwhile, the Asian Development Bank is considering ending preferential ODA for Vietnam. Before 2010, the World Bank provided Vietnam ODA loans with the average annual interest rate of 1%, but the rate has increased to 1.5% in recent years. Over the past 10 years, Vietnam had signed a total of USD45 billion of ODA loans. Up to 92% of this was granted to localities nationwide, while the remaining rate of 8% was re-lent, Thao added. She said that ODA use efficiency in many localities remained low, causing big waste which has put more pressure on the country’s public debts, noting that it was essential to raise the ODA re-lending ratio. Disadvantaged areas will still be granted with ODA as at present, while ODA granted for localities such as Hanoi, HCM City and Danang which have better socio-economic development will sharply decrease.