WB to cut preferential ODA for Vietnam from 2017: official

The World Bank (WB) has announced it would stop offering preferential official development assistance (ODA) to Vietnam from July 2017, said a Vietnamese financial official.

Vietnam's state-run radio VOV on Wednesday quoted Truong Hung Long, head of Vietnamese Ministry of Finance (MoF)'s Debt Management and External Finance Department as saying at a press conference on ODA lending policies held in capital Hanoi on Tuesday.

According to Long, since 2010, Vietnam has turned to lower middle income status, thus the concession level among ODA loans for Vietnam has remarkably decreased.

Prior to 2010, average repayment period was around 30 years to 40 years with borrowing costs between 0.7 and 0.8 percent per year, including a grace period.

In comparison, during the 2011 to 2015 period, the average repayment period was between 10 years and 20 years and borrowing cost was at least 2 percent per year.

After July 2017, the country must access less preferential loans and move toward using loans at market conditions.

Those already-borrowed ODA loans will be transferred into those with shorter repayment period or with higher interest rates, VOV quoted Long as saying.

According to the MoF, in 2015, Vietnam spent around 16 percent of the country's state budget revenue on paying debts.

In 2016, the figure is calculated to hit over 24 percent of the state budget revenue.

The ministry proposed in the coming time, Vietnamese government should focus ODA loans in key sectors and projects, narrow the scope of allocations from the state budget and alleviate state subsidies in use of foreign loans, VOV added.

In the past 10 years during 2005-2015 period, Vietnam had signed a total of 45 billion U.S. dollars of ODA loans, said MoF. Endit