Nhan Dan - Fifteen years ago, in October 1993, Vietnam officially resumed credit relations with three international financial and monetary organisations: the International Monetary Fund (IMF), the World Bank (WB) and the Asian Development Bank (ADB). On the threshold of the IMF/WB annual meeting in mid-October 2008 in Washington DC, the governor of the State Bank of Vietnam (SBV) Nguyen Van Giau looks back at the process of co-operation with IMF, WB and ADB to continue develop the recorded achievements so as to further increase the effectiveness of the support from these organisations.

It can be said that for developing countries in Asia like Vietnam, these three international institutions are the most important providers of official development assistance (ODA) capital.

After the victory in Spring 1975, the Socialist Republic of Vietnam officially took over the membership status at IMF/WB/ADB and the SBV was assigned to be the representative for the country at these institutions.

From 1976 to 1981, the SBV actively worked with IMF to borrow SDR200 million to help Vietnam overcome difficulties in balance of payment. In 1978, WB also provided a credit worth US$60 million for the Dau Tieng Irrigation Project in the 1978-1983 period.

In 1985, the relations between Vietnam and these monetary financial institutions entered a difficult period when IMF, and then WB and ADB, suspended Vietnam's right to borrow due to overdue debts.

During this period, the SBV, with diplomatic efforts, managed to maintain membership relations at IMF/WB/ADB, thus creating premises for the resume of credit relations later on. IMF's support was implemented through working groups on macro-economy and technical assistance.

In August 1989, WB sent an economic group to Vietnam. In October 1993, with great efforts and the determination to carry out reforms by the Vietnamese government and the goodwill financial arrangement by donors of the Paris Club, credit relations between IMF and Vietnam was officially resumed.

This was the results of persevering negotiations between Vietnamese government with other governments and some foreign banks to mobilise sponsorship for the payment of all overdue debts.

Right after that, WB and ADB as well as other international donors nomalised credit relations with Vietnam. WB provided a loan worth US$35 million to pay for debts of the London Club, thus creating favourable conditions for Vietnam to mobilise capital from sources on the international financial market.

Since then, the technical and financial support from these institutions to Vietnam has been increasing, contributing to helping Vietnam record remarkable achievements.

Of the total of US$42.438 billion worth of ODA pledged by the international community for Vietnam in the 1993-2007 period, the three organisations contributed nearly US$11 billion as preferential aid to 130 projects and programmes and over US$480 million as non-refundable aid.

Right after the early days of resuming relations, the Government of Vietnam instructed the SBV and relevant agencies to co-ordinate with international organisations to build programmes to reform macro economic structure and invest in development of industries and sectors which were key to the country's socio-economic development and poverty reduction.

Through assistance and technical supporting programmes, with their experience, IMF, WB and ADB have provided suitable advice and consultancy. Their assistance are all aimed to support Vietnam to carry out its reform programmes. Financially, loans provided by them supported Vietnam's balance of payments and partly paid costs exempting from the process of economic reforms and shifting.

WB and ADB have made great contributions to Vietnam's infrastructural development during the past 15 years. Big loans with preferential interest rates and long grace periods provided by these institutions have helped Vietnam have the investment for key infrastructural projects.

Both organisations have focused on the fields of high priority including agriculture and rural development, irrigation, energy, urban and rural infrastructure, transport, health care and education.

Their projects have made effective and active contributions to improve economic infrastructural facilities, develop social services, strength institutions, develop human resources and manage natural resources.

The country's achievements in economic development and reform and infrastructural construction have laid foundations for the country to record achievements in hunger elimination and poverty reduction and improve the people’s living conditions.

The contributions by the IMF, WB and ADB to Vietnam's achievements in hunger elimination and poverty reduction are undeniable. Within 15 years, from 1993 to 2007, Vietnam's poverty rate saw a sharp decrease to 14.7% from 58%.

The organisations’ targets have been specified in various programmes and projects, particularly the IMF’s Poverty Reduction and Growth Facility (PRGF), the WB’s Poverty Reduction Support Credit (PRSC), and the WB and ADB’s loans for poor rural areas.

The three institutions have also assisted the Vietnamese Government in developing Vietnam’s Comprehensive Poverty Reduction and Growth Strategy (CPRGS), a combination in targets and solutions of the country’s ten-year Socio-Economic Development Strategy (2001-2010) and the five-year Socio-Economic Development Plan (2006-2010) towards sustainable growth, hunger elimination and poverty reduction. CPRGS has also been the foundations to call for assistance and investment from donors for the country's fight against hunger and poverty.

In addition, the organisations helped Vietnamese government agencies improve officials’ capacity through financing personnel training programmes. They also provided valuable technical assistance, helping Vietnamese organisations approach international standards.

The Vietnamese government and donors have been actively working together to simplify procedures for ODA projects and to improve the efficiency and effectiveness of ODA management and use.

The attraction and use of ODA provided by international organisations have played an important role in successful implementation of the external relations policy of openness, diversification and multilateralisation while maintaining national independence, self-reliance and sovereignty.

The effectiveness in the work of ODA mobilisation and use by Vietnam has been highly spoken of by international organisations and Vietnam has regularly been mentioned as a successful model.

By Nguyen Van Giau
Member of the Communist Party of Vietnam's Central Committee
Governor of the State Bank of Vietnam