The decree grasped thoroughly the policy of decentralising management, usage and allocation of ODA sources effectively and reasonably, which required programme or project owners being those who directly manage and use the ODA fund. They must also be the construction managers and users after the completion of their projects.

Together with Decree No. 131, the government's approval of the strategy of guidelines for attracting and using ODA funds in the 2006-10 period rendered more favourable conditions for donors to link their assistance with Viet Nam's development priorities.

Under the strategy, ODA funds are prioritised for programmes and projects combining agricultural and rural development goals with hunger and poverty alleviation targets, as well as projects on comprehensive infrastructure, social infrastructure facilities building, environmental and natural resource protection, institutional ability enhancement, human resource development, in addition to technology transfer and research.

The strategy focused on attracting and using ODA funds from potential donors in large-scale infrastructure projects of national stature, such as the north-south highway, roads in the mountainous areas in the northern, the Central Highland and the Mekong Delta region, transport corridors under the framework of the expanded sub-Mekong region cooperation, railway lines, construction of deep sea ports, international airports, above ground railways, and underground railways.

Klaus Rohland, Director of the World Bank's Viet Nam Office, said most of donors agreed to associate their strategies with Viet Nam's next five-year development plan for 2006-10, contrary to what they have planned in previous donation strategies which were not made harmonious with follow-up five-year plans.

Viet Nam's government has introduced reforms on foreign debt management under the principles of carefully managing government's commercial loans from foreign countries and restricting the use of short-term commercial loans for long-term targets. The government shall not take responsibility for foreign loans borrowed by state-owned enterprises or private companies, unless cases that got the government's guarantees.

The Ministry of Finance recently affirmed that it would renovate its ODA management method, tightening conditions for loans, maintaining a certain safety level and national security as well as totally rejecting ODA loans that are inefficient or low efficient as a result to many binding factors.

Regarding disbursement situation, since the beginning of 2006 the government has instructed related agencies to carry out effective measures for simplifying procedures and reducing costs in order to push the disbursement speed and increase the effectiveness of ODA fund usage. These efforts have helped disburse some 1.8 billion USD of ODA funds.

According to the Ministry of Finance, international donors committed 32.53 billion USD for Viet Nam in the 1993-2005 period, 15-20 percent of which was non-refundable aid and the rest was preferential loans. Most of the ODA funds were reserved for infrastructure development.

Japan, the World Bank and the Asian Development Bank are the three largest ODA providers among more than 50 international donors, accounting for 80 percent of the total value of signed ODA agreements. ODA funds at present account for about 12 percent of Viet Nam's total social investment capital, 28 percent of the total investment capital from the State budget and 50 percent of the state development credits.

Source: Vietnam Agency