AEF 7 improves aid effectiveness for sustainable development

15:07 | 03/12/2013 Economy

(VEN) - On the threshold of the Vietnam Development Partnership Forum (VDPF) scheduled to take place on December 5, 2013, the Ministry of Planning and Investment held the 7th Aid Effectiveness Forum (AEF 7) on enhancing the effectiveness of aid for sustainable development on November 26 in Hanoi.

Promoting disbursement to enhance ODA effectiveness

At the forum, participants discussed the prospects of development cooperation relations of Vietnam on the basis of results of 20 years of development cooperative relations between Vietnam and its donors, as well as in the new development context of Vietnam after Vietnam became an average-income country.

In general, the discussion in AEF 7 showed that although Vietnam has ranked among average-income countries it still needs the support of international donors through official development assistance (ODA) to ensure sustainable development and avoid the ‘average income trap’. In the context of becoming an average-income country, ODA for Vietnam tended to decrease so Vietnam needs to have good strategies, policies and solutions to efficiently use less preferential loans and make better use of financial sources for sustainable development.

Specifically, Vietnam needs to improve aid efficiency through the promotion of ODA disbursements. More than US$20 billion in ODA from six banks that had not been disbursed by 2012 was a huge waste of resources, said the World Bank (WB) representative.

Ministry of Planning and Investment’s Foreign Economic Relations Department Deputy Director Cao Manh Cuong said that Vietnam should use ODA properly to increase aid effectiveness. Grants should be used for poverty reduction, healthcare and social fields, preferential ODA should be used for infrastructure development and projects whose capital is difficult to be recovered, and less preferential loans should be invested in key projects earning revenues that can have capital recovered fast, such as electric power and gas projects.

To better exploit financial resources for development, forum participants said that Vietnam should have mechanisms to encourage the private sector to participate more actively in the development of infrastructure under the public-private partnership (PPP) mode. To attract the private sector’s participation in infrastructure construction, Vietnam needs to use ODA more effectively and it can use ODA as a catalyst to attract other resources. At the same time, Vietnam needs to make the use of ODA more transparent, said the Korea International Cooperation Agency (KOICA) representative.

Vietnam also needs to promote technical cooperation, knowledge and development experience exchanges and technology transfer through developed countries and developing countries and between developed countries, as well as between developing countries with financial support from donors.

Sharing the donors’ point of view that it is necessary to use aid effectively to reach sustainable growth, Deputy Minister of Planning and Investment Nguyen The Phuong said that although Vietnam has become an average-income country, average per capita income in the country reached only US$1,600 per year, while the criterion is US$1,000-US$10,000 per capita per year. Therefore, the effective use of ODA is targeted by the government of Vietnam.

Vietnam is working with development partners to guide the use of ODA with different incentives and from different donors in order to invest in the right fields and the right priority areas./.

By Chu Huynh