Vietnam needs $39.5 billion from ODA during 2016-2020

February 24, 2016 | 05:50 pm GMT+7

Vietnam plans to raise $39.5 billion in official development assistance and preferential loans between 2016 and 2020 to boost its economic growth, according to a plan officially approved on February 17 by the Prime Minister to attract, manage and use overseas-sponsored funds.

Vietnam plans to mainly invest funds from official development assistance (ODA) and preferential loans in transport infrastructure, urban development, agriculture advancement, education improvements and development in science and technology. The plan stipulates the funds are not to be used in the sectors which offer potential investment opportunities for private enterprises.

Currently, $22 billion in ODA and preferential loans secured between 2011 and 2015 has not been disbursed, government statistics show.

Nearly 70 percent of the country’s total overseas-raised funds would come from ODA and preferential borrowing, with estimates that Vietnam is expected to use between $25 billion and $30 billion from ODA and preferential loans in the next five years, a 14 percent increase from the previous five-year period.

From 2011 to 2015, international financial donors provided Vietnam with a total of $26.3 billion either in official assistance or through preferential lending, of which Japan provided more than $10 billion, becoming the biggest sponsor to Vietnam, according to statistics from the Ministry of Planning and Investment.

Transport infrastructure was a top priority during the same period, which consumed up to 36 percent of total ODA funds.

Vietnam is still heavily dependent on financial support and receiving credit at lower interest rates from overseas, which, as statistics show, has maintained an annual average of 47.4 percent of the state budget in the past five years.

The plan to attract, manage and use ODA and preferential loans should be in line with the country’s public debt and foreign debt strategies in the 2011-2020 period with a vision towards 2030, indicating that public debt, government debt and budget deficits should be kept at acceptable levels.

With an aim of achieving an economic growth rate of 6.5 percent to 7 percent, Vietnam is estimated to need $470 billion for its socioeconomic development during the period between 2016 and 2020, of which 25 percent would be raised from overseas.