Improving ODA efficiency

According to the latest statistics by the Ministry of Planning and Investment (MPI), Vietnam has attracted 35 ODA projects worth over US$3.686 billion since early this year, of which about US$30.17 million is given in the form of non-refundable aid, equivalent to 78.1 percent of last year’s figure.

MPI Deputy Minister Cao Viet Sinh says ODA is an important source of capital for the national economy, especially when the State budget is shrinking with its funding for projects in the past ten months standing at 74.7 percent of the yearly plan, he adds.

In difficult circumstances, ODA is considered an effective short-term solution to help cash-strapped businesses.

Over the past two decades, the amount of ODA funding has kept increasing despite the country’s GDP per capita exceeding US$1,000/year.

From 1993 to 2011, annual ODA commitments reached US$3.62 billion on average with just US$1.67 billion disbursed a year.

Since 1993, Vietnam has disbursed more than US$35.5 billion or 50.2 percent of ODA commitments, equal to 13.9 percent of its total social investment.

ODA, to certain extent, has helped increase Vietnam’s foreign currency reserves and improve its overall trade balance.

Non-refundable aid which makes up 10-20 percent of total ODA funding has a duration term of 30-40 years with preferential interest rates of just 1 percent or a little more. But it gives a strong boost to various projects, especially related to poverty reduction, infrastructure development, and environmental protection.

As Vietnam has shed its status as one of low-income countries it needs to use ODA funding with increasing efficiency for the benefit of socio-economic development.