Prioritizing ODA and other Public Investment Sources as Part of a Prudent Public Debt Management Strategy
After decades of a relatively high level of public investment including from ODA concessional loans, low middle income Viet Nam, in its transition towards ODA graduation, is facing a changing development finance landscape. The public debt is approaching the public debt ceiling set by the National Assembly, while its need for development finance remains very high.
Embarking on a more inclusive and sustainable development pathway to achieve Viet Nam’s Sustainable Development Goals requires Government of Viet Nam to develop and apply new strategy and approaches in financing its development in general and in mobilizing and utilizing ODA loans in particular. Following the National Assembly’s approval of the Law on Public Debt management, Ministry of Planning and Investment (MPI) was assigned by the Government of Viet Nam to update the directions of attracting, managing and utilizing ODA concessional loans. The overall aim of the task is to enhance effectiveness of mobilization and utilization of ODA concessional loan projects while maintaining the prudential public debt management.
Responding to the MPI’s request for support, UNDP has commissioned an international consultant’s paper as inputs to drafting the MPI-led Report “Updated orientation for mobilization and utilization of ODA and concessional credit in the period 2018-2020, with a vision to 2021-2025”. The paper, drawing from international experience and economic theory, presents a framework for prioritizing public investment projects, including ODA loans, bearing in mind the public debt ceiling approved by the National Assembly, and provides a set of selection criteria as well as an institutional framework for the allocation of public investment funds.