A boost for ODA disbursement

Joint ODA National Steering Committee and six banks meeting, Ha Noi, June 17, 2019 - Photo: VGP/Hai Minh

The meeting drew the attendance of representatives from Vietnamese ministries, agencies, the World Bank (WB), the Asian Development Bank (ADB), the Japan International Cooperation Agency (JICA), the Export–Import Bank of Korea (KEXIM), the French Development Agency (AFD) and the German Development Bank (KfW). 

The meeting aimed to seek measures to speed up disbursement rates of ODA and preferential loans which were on the decline over the past years. 

As of late 2018, Viet Nam received US$ 80 billion of ODA and preferential loans, becoming one of the biggest ODA recipients in the world. The aforesaid banks provided about 80% of the total ODA and preferential loans. 

Of the money, US$ 7 billion was non-refundable aid. The rest of over US$ 70 billion was preferential loans with interest rates of less than 2% and US$ 1.62 billion, less preferential loans. 

The bank donors praised Viet Nam for effectively optimizing the loans and continued to make further commitments for Viet Nam. 

In 2018 only, the six banks pledged to provide US$ 28.9 billion of ODA and preferential loans. However, the amount of non-disbursed capital remained highly with about US$ 16.9 billion, equivalent to 7% of Viet Nam’s GDP. 

Over the past years, the proportion of disbursement fell from 23.1% in 2014 to only 11.2% in 2018, lower than the global average rates of the six banks. 

Experts attributed the slow progress to complicated procedures, low availability level, and high requirements for disbursement. 

The slow disbursement speed led to prolong projects, higher costs, inefficient investment, and affected GDP growth. 

It is necessary for relevant sides to make stronger commitments and take drastic steps, especially the six banks to work with the Government to build the medium-term public investment plan in the 2021-2025 period on ODA and preferential loans./.  

By Kim Loan