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Better ODA control is a must

Update: November, 12/2014 - 10:16

Permanent member of the National Assembly's Committee for Financial and Budgetary Affairs, Bui Duc Thu, tells the Nhan Dan (People) newspaper that the use of ODA has been marked by inefficiencies.

Many NA deputies voiced their concerns over the losses and wastefulness in managing and using ODA. As permanent member of the NA Committee for Financial and Budgetary Affairs, what do you think about this?

I see that ODA sources have made great contributions to national socio-economic development. However, inspections show that there are ineffective ODA projects not in urgent need of investment.

In addition, many ODA projects adopt regulations on foreign contractors or the mandatory use of materials and fuel of ODA donor countries that increase project expenditures and reduce the effective use of the money.

The NA Committee for Financial and Budgetary Affairs has supervised and made reports on public debt issues, including problems and recommendations. But, it needs supervision at a higher level from the NA Standing Committee or the NA to turn out a more comprehensive review of the issue.

Larger-scale supervision in co-ordination with Government support and a clearer overview of the public debt situation will allow hindrances and solutions to be sorted out.

What are the difficulties in monitoring ODA capital? Is there any restricted area?

We have no restricted area in managing investment capital, public finance and debts. Even security issues still undergo audit and inspection under security mechanisms.

It is difficult for the NA to supervise objectives using ODA sources as they are spread out over ministries, departments and localities. In addition, the NA Committee for Financial and Budgetary Affairs faces challenges in monitoring individual ODA projects as it mainly conducts overall supervision. Thus, it is necessary to use other State tools, such as State Audit to assist the NA in dealing with this issue.

It was suggested that Viet Nam should graduate from ODA. Do you think this is appropriate while the budget is limited and the country needs investment capital for development?

Viet Nam has an enormous demand for capital to invest and to achieve its goals for industrialisation and modernisation. Foreign capital sources are of great importance as domestic sources are insufficient.

Moreover, borrowing ODA loans has more advantages than mobilising from internal sources. In recent years, along with budget overspending, capital mobilised for Government bonds and rollover loans, Viet Nam has had to borrow an additional VND400 trillion (US$18.8 billion). But the interest rates of commercial loans are higher than ODA loans and repayment pressure is very high.

How can Viet Nam effectively manage and use ODA sources?

As I've mentioned above, we only grant ODA to necessary and urgent projects. In addition, ODA projects should follow a series of regulations.

For instance, the cost per unit of an ODA project must be lower than that of a corresponding project using domestic sources.

I suggest stopping ODA projects with a high cost per unit during the investment appraisal. — VNS

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