Vietnam Loses Billions In Foreign Aid Due To Administrative Stagnation: Report

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Vietnam has reportedly lost at least $2.5 billion in foreign aid over the past three years due to administrative stagnation. The country is at risk of losing an additional $1 billion, as revealed in a letter to the government from the United Nations, the World Bank, and Western donors.

The letter, dated Mar. 6, expresses the growing frustration of foreign investors over regulatory obstacles and prolonged approval procedures that have led to a stalemate, Reuters reported on Friday. This situation is further aggravated by an escalating anti-corruption campaign and political instability in the Communist-ruled nation.

The letter, jointly signed by the heads of the U.N. and World Bank in Vietnam, along with 18 ambassadors, warns of potential losses equivalent to nearly 1% of Vietnam’s GDP. The expiration of these funds could delay vital projects, such as infrastructure improvements. The letter also hints that more funds may have been lost due to the protracted approval processes.

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High-ranking foreign officials link the administrative roadblocks to the ongoing anti-corruption drive. This campaign has caused a sort of paralysis, with officials wary of approving or advancing initiatives for fear of inadvertently breaching complex regulations.

Despite these challenges, Vietnam is finding it difficult to utilize even its own public funds. The finance ministry has reported that the country failed to invest approximately $19 billion from 2021 to 2023, falling short of the planned investment by 25%.

The growing frustration among donors is leading to decisions that could decrease future aid to Vietnam. For instance, the World Bank is considering merging its Hanoi office with operations in Cambodia and Laos from July, which could potentially shift its focus.

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Image via Shutterstock


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Posted In: NewsGlobalGeneralforeign aidPooja RajkumariUnited NationsVietnamWorld Bank
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