Promise unkept (02/11)
02/12/2011 - 8 Lượt xem
Just as someone may spend money on something that perhaps isn’t really necessary, it’s true that official development assistance (ODA) to Vietnam has sometimes gone to waste in the past. But given the current economic climate, with capital inflows to the country declining significantly, the time has come when ODA must be used more effectively and efficiently. Doing so is a promise Vietnam makes to the foreign donor community and it must act to reassure international donors that funds are no longer being wasted.
For nearly 20 years ODA has been crucial for developing countries like Vietnam. And it’s clear that ODA’s role in the country is becoming more important amid shrinking foreign direct investment (FDI) inflows this year. As for the government, it is addressing the persistent frustration of international donors - slow disbursement of ODA funds.
Official figures show that ODA disbursement in the first five months of this year reached $1.26 billion, meeting 52.5 per cent of the yearly target. When spent correctly, the benefits of ODA can be enormous.
Outdated figures
Several factors have been attributed to the higher ODA disbursement rate this year. The Ministry of Planning and Investment (MPI) said that ODA disbursement is on the rise thanks to a surge in that provided by the Japan International Cooperation Agency (JICA) before the end of the Japanese fiscal year on March 31.
MPI is also optimistic about the disbursement rate towards the end of the year. In years past the country has anticipated a disbursement rate of about 40 per cent of the target for the first six months. This year, though, the actual figure rose to 52.5 per cent, an achievement that delighted authorities.
MPI is also optimistic about the disbursement rate towards the end of the year. In years past the country has anticipated a disbursement rate of about 40 per cent of the target for the first six months. This year, though, the actual figure rose to 52.5 per cent, an achievement that delighted authorities.
Despite the surge in disbursement this year, analysts and insiders admit that the rate is still lower than the global average. One expert with extensive experience in ODA told VET that he was not sure whether to take the disbursement rate this year as an encouraging sign or not. “Anyway, it is only an estimate and we know that it is far from actual demand,” he explained. “Moreover, the exact figure for disbursement is not updated regularly and it’s very hard to do research on ODA.”
At the time of writing only the disbursement figure for the first five months of the year is available, which was released on the eve of the mid-term Consultative Group meeting in June. As VET goes to press this month the figure for the first nine months of the year is due any day.
Outdated figures can, of course, paint a confusing picture of ODA use. MPI hailed the five-month figure as a breakthrough in ODA disbursement when it was released, but later reports from other ministries acknowledged that disbursement was still slow. For example, a Ministry of Finance (MoF) report released in September revealed that disbursement in ODA projects under the ministry stood at just 18 per cent, far lower than the yearly target.
Slow going
General speaking, there are two trains of thought among international donors about ODA to Vietnam. While some give the country top marks in terms of effective use, others believe that the issue of slow disbursement needs to be taken more seriously. Looking closer at the performance of ODA projects funded by the World Bank, from which Vietnam received the largest amount of ODA this year ($2.6 billion), may well reveal that there are a number of bottlenecks constraining disbursement.
According to official figures from MPI, of the 53 programmes and projects funded by the World Bank there are four encountering serious difficulties, including telecommunications technical development projects, the Hanoi urban transport project, healthcare support for the poor, and the customs modernisation project. Disbursement in these projects during the first three months of 2011 was estimated at $497 million, or lower than the same period last year.
Regarding ODA allocation and implementation, the figures show that the Ministry of Industry and Trade, the Ministry of Transport and the Ministry of Agriculture and Rural Development achieved an acceptable level of ODA disbursement, averaging more than 45 per cent each. Meanwhile, disbursement at the Ministry of Education and Training, MoF and MPI were pretty low, averaging 10 per cent each. As regards cities and provinces, Ho Chi Minh City topped the country with 66.13 per cent. Surprisingly, one grant of $174.9 million from the World Bank was received by Hai Phong city, but nothing has been disbursed as yet.
In 2011 there are nine projects with very slow disbursement rates, three of which carried over from 2010. According to Mr Cao Manh Cuong, Deputy Head of the Foreign Economic Relations Department under MPI, the disbursement problems are due to delays in selecting consultants and the implementation of bidding packages. “However, the review of performance of ODA projects in 2011 show that problems in nine projects are fewer and less serious than those in 2010,” he said.
With the aim of enhancing the effective use of ODA funds, MPI has cooperated with foreign donors to work on improving the assessment and implementation of ODA-funded projects. In 2007 MPI and JICA developed a cooperative programme to improve capacity in evaluating and implementing Japanese-funded projects in Vietnam.
The World Bank also recently launched a preparatory budget to fund the detailed design phase of any ODA projects. Mr Cuong said that, in the future, MPI, the World Bank and related agencies would continue to select the most problematic projects for performance review. Results will be submitted to the Prime Minister and MPI will make recommendations to related ministries and provinces to adopt certain measures to speed up project implementation.
Thorough participation
ODA loans involve a range of related ministries and departments. For example, the State Bank of Vietnam (SBV)’s mission is to sign ODA loan agreements with international donors. MPI then distributes these funds to other ministries and provinces, while MoF is the supervisor and has responsibility for ODA debt settlement.
It has been suggested that MPI should be the focal point for matters regarding ODA and other ministries should only provide it with assistance. But putting too much power in only a few hands can have negative consequences and this is why participation by more than one State agency is encouraged.
Participation by the SBV is based on the banking law, which stipulates that the SBV is responsible for signing ODA loan agreements with banking partners such as the World Bank or the Asian Development Bank (ADB).
There is definitely room for improvement. In order to update the implementation of ODA projects MPI has requested other ministries and provinces to send reports each quarter.
However, some ministries and provinces do not submit these reports on time and others just ignore MPI’s requests. MPI has claimed that tardiness in updating the ODA disbursement figures for the first half of 2011 is partly due to the fact that four cities and provinces are yet to submit their reports.
Source: VNEconomy.
