Viet Nam is barrelling towards becoming a country with an average income level equal to world standards by 2010, however the World Bank (WB) says continued assistance is still needed in social areas.

The comments were made by WB Country Director Ajay Chhibber at a press briefing on November 29 about a Consultative Group meeting to be held in Ha Noi next month.

WB Country Director Ajay Chhibber forecasted that foreign direct investment flowing into Viet Nam will strongly increase in comparison with the 16 billion USD commitment by international donors in 2007.

However, the capital chiefly targets those sectors that will generate profits, he said.

“Accordingly, WB will continue to increase projects benefiting from the International Development Association (IDA) – the bank’s concessional or low-cost lending arm for Viet Nam to support the country in poverty reduction, health care and education development, particularly in higher education and infrastructure,” the director said.

The chief WB representative in Viet Nam also said he hoped the international donor community will continue to make a strong commitment to Viet Nam in the coming years.

Chhibber said he will inform foreign donors at the Consultative Group Meeting that Viet Nam is still in need of Official Development Assistance (ODA) in many areas for sustainable development.

He noted that the ODA disbursement pace of Viet Nam has been hastened in 2007. ODA commitment for the country reached close to 4.45 billion USD in 2007, increasing more than 700 million USD over 2006.

However, according to WB Chief Economist Martin Rama, assistance commitment for Viet Nam will sharply decrease from the 2015-2020 period, particularly in non-refundable aid.

He said the country will have to rely on commercial loans for economic development, because at that time it will move to become an average income country.

He said that 2007 saw great achievements for Viet Nam, citing the country’s sustainable economic development growth rate of more than 8 percent in three consecutive years, as well as its impressive poverty reduction, improved competitive edge and record FDI attraction.

Nevertheless, Rama warned that increased inflation, consumer price index’s in excess of 10 percent and “hot” growth of the securities market will hinder the country’s economic development.

He proposed the government continue to improve the effectiveness of implementing World Trade Organisation (WTO) commitments, restructuring the banking system, strengthening management over new financial institutions, and improving competitive capacity for infrastructure services sectors.

The CG meeting to be held on December 6-7, titled “Creating a foundation for sustainable development”, will be a forum for donors to discuss development programmes and priorities of the Vietnamese government, and ways they can meet the country’s development needs.

The WB and the International Financial Corporation (IFC) will host a business forum prior to the CG meeting, focusing on matters including banking, capital market, real estate, ports, telecommunications, production and distribution, and education.

Source: VNEconomy.