Vietnam’s disbursement rate of official development assistance (ODA) from six major development banks has dropped significantly from 23.1% in 2014 to 11.2% in 2018, much lower than the global average rate.
Overview of the meeting. Source: VGP.
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Putting in perspective, the average global disbursement rate of the ADB and World Bank in 2018 was 21% and 20.2%, respectively.
In 2018, total committed ODA to Vietnam from six banks reached US$28.9 billion, however, the amount pending disbursement amounted to US$16.9 billion, equivalent to 7% of Vietnam’s GDP.
Assuming Vietnam had a disbursement rate of 21% in 2018, the country would have disbursed an additional US$1.8 billion, or 0.75% of the country's GDP.
Experts at the conference pointed out that reasons for such slow progress were cumbersome and overlapping regulations, as well as the low readiness of the projects, among others.
The slow disbursement progress has led to delay in project implementation and failure to fulfill development objectives. Meanwhile, this could potentially raise the cost of the projects, in turn reducing the efficiency and causing negative impacts on Vietnam’s GDP growth.
Such circumstance requires strong efforts and commitments from all parties concerned, including solutions to address specific bottlenecks.
Representatives of the Vietnamese government suggested more support from six banks in drafting the public investment plan for ODA and preferential loans in the 2021 – 2025 period.
As of 2018, Vietnam has become one of the largest beneficiaries of the ODA funds, receiving a total of US$80 billion, of which 80% came from the six banks.
Upon breaking down, US$7 billion was nonrefundable aid, over US$70 billion was loans with interest rate below 2% and US$1.62 billion with interest rates lower than current market levels.
All six banks shared the same view that Vietnam has utilized efficiently the ODA for development, which is the main reason for donors to continue its support to Vietnam.
Reports from JICA, ADB and WB showed projects funded by these banks in Vietnam have achieved better results compared to other countries, including India, Indonesia, the Philippines and Sri Lanka.
