Vietnam’s total debts to foreign countries reached US$22 billion by the end of 2008 and the figure is forecast to amount to approximately US$34 billion in 2010, provided that the committed aid will be disbursed completely. Though there are no official updates on public debts, including government debts, a recent report by the National Assembly Committee for Economic Affairs shows that government debts have continued to increase annually, accounting for 36.5 percent of GDP in 2008, 40 percent in 2009 and even 44 percent in 2010 or, in other words, nearly half of Vietnam’s earnings every year.

There is no denying that ODA and other foreign loans have played a very important role in national modernisation. Without such sources, Vietnam could not have developed its infrastructure and found it easy to make impressive achievements in poverty reduction and global integration which have been acknowledged internationally.

The commitment of and for 2010 is the highest collective aid on record. It testifies to Vietnam’s great effort in conducting dialogues with donors, revising policies and accelerating reform to adhere to international norms. Those big sources of capital will flow in to Vietnam only when donor requirements are met. At the Consultative Group (CG) meeting for Vietnam 2009, Prime Minister Nguyen Tan Dung assured donors that their contribution will not fall into the wrong hands and that the money donated will be managed and used in an effective and responsible manner.

The question here is that if the aid is used ineffectively or corrupted, it will shoulder a financial burden on future generations. Although no detailed assessments on the use of public investments and ODA have been made, there is growing concern about a number of graft cases in this field. A recent example is the arrest of the former head of the Ho Chi Minh Highway project linking north and south Vietnam. He was found to embezzle nearly VND10 billion between 2001-2004.

Earlier, two officials were arrested and prosecuted for taking bribes in notorious graft scandals at the Project Management Unit 18 (PMU 18) and Ho Chi Minh City’s East-West Highway Project. However, these cases are incomplete yet as further investigations are underway. It is worth noting that these cases are found within the transport sector only.

Another worrying sign is that Vietnam’s Incremental Capital Output Ratio (ICOR) has reached the alarming level. This year, the ratio peaked at 8 which is 2.5 times higher than the ideal level recommended by international financial institutions. Notably, the ratio rose to 12 in public spending.

Last year, the government paid debts worth more than US$1.1 billion, and the figure is predicted to be higher in 2009 and the following years. Although Vietnam’s debts are within safety limits, everybody should know that the government will continue to pay debts in exchange for growth and prosperity.

At the CG Meeting 2009, PM Dung confirmed that Vietnam will make a greater effort to combat corruption, considering this an urgent task of the government. In addition, it will continue to promote democracy, stabilise the macro economy and achieve steady growth.

Besides improving the State management capacity, it is necessary for the government to promote transparency and develop mechanisms for the people to oversee ODA-funded projects. Using ODA properly and effectively is the responsibility of not only the State but also the entire society.