National Consultation on Aid Effectiveness 2 nd October, 2007 Hanoi

Content of the Presentation  Aid Effectiveness in Vietnam  Opportunities and prospects  ODA Disbursement by terms  HCS- Challenges in the past  National Initiatives, and  Suggestions

Aid Effectiveness in Vietnam  Following the Paris Declaration in March 2005 Vietnam and its development partners localized the Paris Declaration to the country context through the Hanoi Core Statement (HCS)  HSC was adopted with the aim to improve the quality of aid assistance and monitor progress based on joint targets in the areas of Ownership, alignment, harmonisation and simplification, managing for results and mutual accountability to be achieved by  The HCS was approved by donors present at the Mid-term CG meeting in June 2005 and adopted by the Vietnamese Prime Minister on 28 September  Common vision is to ”take far-reaching and monitorable measures to make aid more effective looking ahead to the achievement of Vietnam’s Development Goals (VDGs) by 2010, and the Millennium Development Goals by 2015

Opportunities and prospects  Partnership Group for Aid effectiveness, has taken a lead in mobilizing ODA under the principles of ‘Hanoi Core Statement’ to support General Budget Support (GBS)  Most programs have supported the achievement of improved health, education and social protection where the GoV is a provider of services or innovations supported by the PRSC with high costs.  Overall programs are supported by 11 donors contributing over $200m a year and expected to increase further.  Simultaneously, the Targeted Budget Support has also increased from US$ 50 million in 2006 to about US$ 120 million in 2007  The donor harmonization initiative has witnessed a huge success with the declaration of HCS as a commitment to the Paris Declaration

ODA Disbursements by Terms

Challenges in the past  Vietnam in the past years has also emerged as one of the largest recipient of ODA  Vietnam has taken a leadership role in coordination of ODA as one of its core activity in close collaboration with the World Bank.  Only in 2006 the total pledges of aid has been up to $ 4.4 billion of which 70% accounts to Japan, ADB and World Bank  Vietnam had to host 774 donor missions in 2005 alone, almost 15 missions per week.  Only 9% of these were joint missions between donors

Challenges…Cntd.  Contrary to the spirit of donor harmonisation the number of special project implementation units in Vietnam alone has been up to 111 in the year 2005  Only 35% of aid to Vietnam is programme based, and 32% uses Vietnam’s own systems for support. The rest is provided as technical assistance  Vietnam faced 41 policy conditions, all of which were binding.  IMF loan to Vietnam included 17 structural conditions, 9 privatisation related, including SOEs and banking reform conditions.  Huge divergences between expected and actual aid in Vietnam those are highly unpredictable aid.

National Initiatives  Independent Monitoring (PGAE)  Aid Monitoring Group  Economic Literacy and Budget Analysis  Parliamentarian’s Forum on Aid Monitoring  Post WTO Poverty Monitoring  Global Campaign to Action against Poverty

Way Forward!!!  Current positioning on Aid effectiveness is a priority for the Government to fulfill its commitments through quality ODA.  Donor harmonization needs a segregated analysis as almost 80% of ODA comes in the form of concessional loans that must be repaid from domestic revenues which has an implication on local economy.  The changing trend of Aid effectiveness has witnessed the enhanced role of EC and other Donor agencies in delivery of quality aid by delivering sustained efforts through CSOs.  Vietnam's positioning in the next phase could be better placed by looking at the OECD norms to promote best practices and add value to the progress in Vietnam  Facilitating an unique model of a socialist governance which need not follow the market order to achieve the core objectives of MDGs.  It is the need of the hour to enhance the focus on aid coordination in Vietnam by engaging the CSOs in design, implementation, and monitoring of Aid, and also by taking part in the ongoing national initiatives

Thank You!!!