Vietnam has lost at least $2.5 billion in foreign aid over the past three years and could lose another $1 billion due to administrative paralysis, the United Nations, World Bank and Western donors told the Vietnamese government in a letter seen by Reuters.
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Vietnam has lost at least $2.5 billion in foreign aid over the past three years and could lose another $1 billion due to administrative paralysis, the United Nations, World Bank and Western donors told the Vietnamese government in a letter seen by Reuters.
The previously unreported data in a March 6 undisclosed document underscores foreign investor frustration with regulatory hurdles and lengthy approval processes that have contributed to a long stalemate in the communist-run country. catch Through an escalating anti-corruption campaign and political turmoil.
The letter to Vietnam’s Prime Minister Pham Minh Chinh stated that “approximately US$1 billion in development funds are awaiting approval and another US$2.5 billion has been returned due to expiry of funds” – effectively indicating a potential loss equivalent to the country’s domestic production Nearly 1% of the total value (GDP).
Expired funds could delay much-needed projects such as infrastructure upgrades, and the donors stressed in the letter that more money could be lost with additional funds “hindered by delays in the approval process.”
Two senior foreign officials interviewed by Reuters directly linked the administrative hurdles to a “raging anti-corruption campaign,” echoing similar comments by other diplomats and officials in recent months.
The anti-corruption movement created a kind of paralysisbureaucrats have been slow to approve or advance measures because they fear accidentally running afoul of complex regulations.
The Treasury said that under these restrictions, the country struggled to spend even its own public funds, failing to invest about $19 billion from 2021 to 2023, a quarter less than planned.
The letter was sent by the heads of the United Nations and the World Bank in Vietnam and signed by 18 ambassadors from the United States, the European Union and Japan, as well as the head of the Asian Development Bank in Vietnam.
Vietnam’s Prime Minister’s Office and Ministry of Investment did not respond to requests for comment.
The United Nations and the World Bank said they have been working closely with the government on the project, with the United Nations acknowledging in a statement to Reuters that there were “challenges” in using the funds.
Vietnam made big pledge to reduce coal use in exchange for Western climate finance, but a year and a half later Dealing with the G7or G7 countries have announced but have not yet disbursed any funds, while Vietnam is stepping up its Coal import Avoid power shortages in foreign-owned factories.
A foreign official involved in the discussions told Reuters that after repeated requests from donors, the government established a working group on the issue and directed officials to review some regulations that hinder access to funds, noting that no time limit for completing the process had been set. deadline.
The power grid is a critical piece of infrastructure in the country that is considered in need of upgrades, and there is significant foreign funding available for the work. However, in an example of the impasse, the official said existing rules bar the state-owned network operator from accessing the funds until at least 2027 due to financial issues.
Donor frustration led to decisions that could reduce future aid to Vietnam.
For example, the World Bank said it will merge its Hanoi office with operations in Cambodia and Laos from July to improve “management efficiencies,” a move that could lead to a shift in focus.
Vietnamese officials urge foreign donors to reduce funding costs, Mainly loans, usually at market price. But Western officials say the country has also lost significant grants.
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