ODA windfall in prospect

Vietnam country director for the World Bank Klaus Rohland said the bank’s ODA commitments to Vietnam this year could reach $750 million, equal to last year’s commitments.
Experts said a combination of the economy’s positive performance and the positive implementation of previously disbursed ODA means Vietnam can be optimistic about receiving a higher level of ODA commitments from the international community, especially Japan, the World Bank and the Asian Development Bank, the three biggest donors so far, or at least equivalent to last year’s figure.
ODA commitments reached a record of $3.4 billion in 2004, $600 million higher than the previous year’s volume, which proves donors have become more deeply involved in Vietnam’s reform process.
World Bank senior economist Vivek Suri said Vietnam’s economic growth rate of 8.1 per cent in the first 10 months of the year was impressive and even higher than the 7.5 per cent projected earlier this year by some international organisations.
World Bank figures released last week show that Vietnam reaped a strong performance from its service sector, which grew at 8.2 per cent in 10 months, and agriculture sector at 4.1 per cent, despite bad weather and avian flu.
Suri said investment was robust at 38.2 per cent of Gross Domestic Product (GDP) in 2005, with FDI commitments to exceed $5 billion and FDI disbursements up 17 per cent year-on-year in 10 months.
Rohland said the implementation of disbursed ODA was on the right track and that international donors know Vietnam’s currently poor infrastructure is in need of a huge amount of ODA commitments for improvements.
However, he said the current foreign exchange rate was not favourable for Vietnam in calculating total ODA commitments in US dollars.
“Now, the weakness of currencies like the Japanese yen and the euro against the US dollar may affect total ODA commitments this year,” he said, explaining that the strength of the euro last year was to Vietnam’s advantage when converting ODA commitments to US dollars.
Out of the 34 international bilateral and multilateral donors who pledged to grant Vietnam a total of $3.4 billion last year, nearly 20 came from Europe, where the euro is the common currency.
The Japanese Government recently pledged to increase ODA commitments to Vietnam despite a reduction in its aid to other countries.
World Bank head economist Martin Rama said Vietnam should pay special attention to quality of growth and attempt to speed up its accession to the World Trade Organization (WTO).
He said the economy would improve after Vietnam joins the WTO, and fiercer competition would make local enterprises operate more effectively.