Vietnam must wean itself off foreign aid: lawmakers

By Bao Van, Thanh Nien News

Email Print

Work on Vietnam's first subway at the Saigon River, an ODA-funded project. Vietnam will continue borrowing $5-6 billion overseas, mainly from ODA and preferential loans, each year by 2020. (Photo: Dinh Phu) Work on Vietnam's first subway at the Saigon River, an ODA-funded project. Vietnam will continue borrowing $5-6 billion overseas, mainly from ODA and preferential loans, each year by 2020. (Photo: Dinh Phu)


Related agencies should strengthen management of official development assistance (ODA) as waste and corruption continue to plague ODA-funded projects, according to comments made by delegates during the ongoing National Assembly (NA) session.
“Most of the misconduct seen at ODA-funded projects has been detected by foreign rather than domestic auditors,” Delegate Nguyen Thi Nga said on Thursday, attributing poor oversight to Vietnam’s limited management capacity.
Nga went on to enumerate a number of ODA scandals in recent years.
The latest case emerged in March, when Japanese media reported that officials from Japan Transportation Consultants Inc. (JTC) told police they'd bribed Vietnam Railways officials to secure a contract for Hanoi's urban railway project.
In 2012, Denmark suspended aid for three climate-change research projects in Vietnam due to reports of fraud.
In 2008, a senior Vietnamese official was charged with taking bribes in 2003 from a Tokyo-based company in connection with a highway linking the east and west of Ho Chi Minh City.
The project was also funded by Japanese ODA.
Wastefulness and corruption have rendered many projects paid for with low-interest ODA loans become very expensive, she said.
The legislature has yet to create a supreme ODA supervisor. This is one reason that faults in ODA-funded projects have helped raise the country’s public debts near to their their safety cap, Nga said.
She urged the government to foster transparency in use of the funds by enlisting citizens and NA delegates to participate in their oversight.
Countries which have made effective use of ODA, such as South Korea and Singapore, have done so thanks to careful management, Nga said. Both countries used ODA solely to build necessary infrastructure and fund poverty reduction efforts.
The countries also moved away from ODA loans to ensure stable development. South Korea ceased receiving ODA after 20 years, and fully repaid the loans after 30 years.
Vietnam should gradually reduce its use of ODA, and then cease it, she said. “Long-term reliance on ODA means the failure of a national development strategy.”
NA Delegate Nguyen Van Tien said Vietnam should make careful use of ODA since further borrowing has the potential to place further pressure on the public debt.
ODA should not function as a normal component of a government's annual budget, he stressed.
To borrow $5-6 bln overseas each year
During the recent NA session, Finance Minister Dinh Tien Dung said Vietnam's public debt is estimated to hit 64 percent of GDP in 2015. The safety ceiling, meanwhile, was set at 65 percent. Up to 98.1 percent of the public debt has been invested in development, he said.
Dung said some development projects, which have relied on overseas loans or were guaranteed by the government have proven ineffective. Their investors have failed to repay the debts and left the government holding the bag.
The use of short-term loans for long-term projects has also placed further debt repayment pressure on the state, he said.
“However, we will have to continue increasing investment to complete half-finished projects," Dung said. "We will consider issuing more government bonds.”
Vietnam has ensured repayment of due debts on time, but its debt structure is unstable, said the minister.
The government has issued some VND137 trillion ($6.5 billion) worth of bonds over the past three years to repay its old loans, he said.
The government has planned to issue VND50 trillion worth of bonds, each year, between 2017 and 2020.
It will also continue borrowing $5-6 billion from foreign lenders, each year, until 2020. Most of those loans, he noted, would come from ODA and preferential loans.
Vietnam expects an annual GDP growth of roughly six percent and inflation of roughly six percent.
Annual spending, however, is expected to exceed GDP by roughly five percent, further swelling the public debt.
The minister anticipated debt would peak at roughly 64.9 percent in 2016, before gradually falling in the following years to 60.2 percent of GDP in 2020.

More Politics News