Development partners pledge $ 7.9 bln in ODA for Vietnam

The two-day Consultative Group Meeting between the Government of Vietnam and development partners wrapped up in Hanoi Wednesday with US$7.9 billion in next year’s official development assistance pledged by international donors for the nation, which enters the Middle Income Country status.

The two-day Consultative Group Meeting between the Government of Vietnam and development partners wrapped up in Hanoi Wednesday with US$7.9 billion in next year’s official development assistance pledged by international donors for the nation, which enters the Middle Income Country status.

The number is lower than the US$8.06 billion for this year, committed last December, but higher than earlier expected.

The development partners’ ODA commitment from the meeting aims to assist Vietnam in stabilizing the macro-economy and to focus on the important aspects of sustainable development.

World Bank Country Director Victoria Kwakwa (R) addresses the closing session as Vietnamese Minister for Planning and Investment Vo Hong Phuc (L) listens, at the two-day meeting on December 8, 2010 in Hanoi (AFP)
World Bank Country Director Victoria Kwakwa (R) addresses the closing session as Vietnamese Minister for Planning and Investment Vo Hong Phuc (L) listens, at the two-day meeting on December 8, 2010 in Hanoi (AFP)

At the meeting, the Vietnamese Government and international donors – the development partners – discussed various important economic and social issues facing the nation, as it embarks on a new phase of development that which will bring new opportunities and threats to the country.

They discussed measures to stabilize the macro-economy, strengthen governance, reduce corruption and make development more sustainable and inclusive, as well as the future of development partnership.

Vietnamese Deputy Prime Minister Pham Gia Khiem attended the first session, mentioning the government’s commitment to undertake the three areas of breakthrough – “developing institutions for a market economy, human resources development and infrastructure development.”

He said ODA will constitute significant contribution of the total investment need for Vietnam’s long term plan. The government values the development assistance received and is doing its best to use ODA in the most effective way, he added

A middle income country: opportunities and threats

The development partners discussed the recent macro economic developments and expressed their concerns about the growing macroeconomic instability in the country and offered a number of suggestions.

Mr. Masato Miyazaki, Division Chief, Asia and Pacific Department of IMF, called for an increased in monetary policy rates combined with fiscal consolidation. Strengthening the financial system and improving communication with the market was also needed, according to him.

He also suggested the need to shift away from directives and controls toward indirect instruments of economic management.

Mr. Ayumi Konishi, Asian Development Bank Country Director for Vietnam, pointed out that despite Vietnam’s intention to use WTO accession to leverage acceleration of reforms, the efficiency and competitiveness of the State-owned enterprise sector has not improved.

He stressed the need for separating the ownership from management of SOEs, and encouraged the Government to let SOEs to operate on commercial principles and on a level playing field with the private sector.

The international donors reiterated the need for higher transparency and modern governance as key to an effective state owned economic sector, which will bring greater benefits to the country and avoid problems Vinashin has experienced recently in the future. 

The Swedish Ambassador, Mr. Staffan Herrström on behalf of the development partners, raised the need to address corruption with urgency. He stressed that much needs to be done, especially in the areas of improving transparency, access to information, developing a vibrant and free media, upholding the rule of law, increasing the autonomy of judiciary and engaging the civil society.

The development partners urged the Government to increase the oversight role of the National Assembly, civil society, citizens and media on the fight against corruption. They also emphasized the need for complementary measures to tackle corruption such as regulation to protect whistle-blowers, pay reforms for government officials, and merit based recruitment of civil servants.

Sustainable development

The Government and development partners agreed on the long term challenges posed by climate change and agreed to work together to address such challenges.

Mr. Guenter W. Riethmacher, Country Director of German Technical Cooperation Agency (GTZ), expressed strong support for climate proofing of the Social Economic Development Strategy to 2020 and the Social Economic Development Plan to 2015, as well as climate proofing of sectoral and provincial social economic development plans.

Despite the fact that Vietnam will receive significant climate change finance, the country will need substantial domestic public and private capital. To this end, the development partners asked the Government to use climate change finance strategically, and sector ministries and localities must access finance for capacity building, TA and investments.

Various development partners agreed that it is vital for Vietnam to maintain economic growth, for which sustainable energy supply is critical, and low carbon growth. They congratulated Vietnam for putting in place various plans to address climate change and environment sustainable issues, but urged the government on the quicker and more effective, substantive implementation of such plans.

Future of development partnership

The international donors and the Government agreed on a need for a new aid partnership with expectation that ODA will contribute more effectively to the 10 year Socio-Economic Development Strategy and the 5 year Socio-Economic Development Plan.

Mr. Motonori Tsuno, Chief Representative of the Japan International Cooperation Agency, co-chair of Aid Effectiveness Forum in Vietnam, indicated that development partners support the new ODA Strategic Framework with priorities. The development partners will also continue to work to move the aid effectiveness agenda forward, and cooperate with Vietnam’s Ministry of Planning and Investment to prepare the new framework to address the key issues in aid effectiveness.

The development partners are committed to making a concerted effort to enhance aid effectiveness for Vietnam’s sustainable development and achievements of Millennium Development Goals and Vietnam Development Goals by 2015.

The World Bank Country Director for Vietnam, Ms. Victoria Kwakwa, noted that Vietnam is at a critical juncture in its development. The development partners stand ready to support Government to redefine its approaches in all areas discussed at this meeting to better address Vietnam’s changing domestic and external environment, she said.

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