Foreign countries, multilateral agencies and international NGOs yesterday pledged to give Viet Nam a record US$5.426 billion in official development assistance (ODA) for 2008.

The figure is up almost 20 per cent over last year’s total $4.45 billion.

The Asian Development Bank is the biggest donor providing $1.35 billion, followed by Japan with $1.111 billion, and the World Bank with $1.110 billion. The EU also promised to hand over $962.8 million in ODA.

The record numbers were proof of growing trust in Viet Nam’s development among the international community, Minister of Planning and Investment Vo Hong Phuc said at the close of a two-day Consultative Group meeting in Ha Noi.

"The commitments show donors’ support for the development process of Viet Nam’s State, Government and people. We’ll ensure this money is used most effectively and reaches every Vietnamese citizen," he said.

World Bank Country Director Ajay Chhibber said that assessments showed that Viet Nam was among the most effective users of ODA in the world.

Donors were extending more kinds of long-term preferential loans to Viet Nam, mainly targeting transport, energy and skilled labour – the three areas that are top constraints on the development of the private sector in Viet Nam, Chhibber said.

According to World Bank Lead Economist Martin Rama, Viet Nam’s external debt, including its sovereign bonds issue, accounts for about 31 per cent of its national income. The country has raised its per capita income to $800.

Country Director Chhibber said Viet Nam would face a lot of challenges in its next phase of development – transforming from a middle-income country to one that’s fully industrialised.

"Many countries reach the middle-income group but fail to move on from that. The focus for Viet Nam is to avoid the ‘middle-income trap’."

Country Director of the Asian Development Bank Ayumi Konishi said that one way to avoid this was honing in on the quality of growth.

"The benefits of global integration can only be grasped by economies whose competitiveness is not undermined by high transaction costs caused by red tape, bureaucracy, and an unresponsive administrative system," he said.

"Strengthening Viet Nam’s public administrative system is essential to transforming the country into a modern, industrialised and prosperous nation."
Minister of Planning and Investment Phuc said the Government recognise the more complex challenges in developing the economy sustainably as it approaches middle-income status.

"Sustainable development is, first of all, the stability of the macroeconomy, and the last few months have seen signs of instability and unsustainability in the macroeconomy" he said, adding that inflation, unemployment, poverty reduction and protecting the environment were foremost hurdles.

A major Government goal for next year is to step up the fight against poverty , ensure economic growth of 8.5-9 per cent in 2008, keep inflation under control, observe the roadmap for banking reform, and ensure that WTO commitments are implemented.

Phuc said that there had been concerted efforts made between the Government and donors to improve disbursement of ODA and this year’s pay outs had approached the world average.

This year Viet Nam has so far disbursed less than $2 billion out of a total $4.4 billion in ODA.

The next CG meeting will be held in the tourist town of Sa Pa, Lao Cai Province in early June next year.  (VNS)