Age of choice: Viet Nam in the new development finance landscape

Research reports and studies
April 2016
Annalisa Prizzon, Maya Schmaljohann

National financing strategies will play a decisive role in implementing the Sustainable Development Goals.

But the development finance landscape has dramatically changed since the early 2000s: there are now more development finance providers than ever before, offering a new ‘age of choice’ in financing options to developing countries. Governments need to better understand the sources of finance and potential partnerships available to them if they are to capitalise on this age of choice in a way that effectively supports their national objectives.

Viet Nam became a lower-middle-income country in 2009 and is now classified as a ‘blend’ country by the World Bank Group. The volume of official development assistance (ODA) it receives is expected to fall but that of other development finance options is expanding, especially more expensive, less-concessional, private sources.

Development finance beyond ODA increased steadily from 2002 to 2013. In 2002 the volume of such flows was less than $90 million, representing 8.5% of total external development finance. Since 2010 this share has increased to a third of all external development finance.

Government priorities regarding the terms and conditions of development finance largely reflect the principles of aid effectiveness it championed in the past, notably ownership of the development agenda and alignment of projects with national priorities. Speed of delivery does not appear to be a major priority.

This study is one of a set of case studies examining the challenges and opportunities facing governments in managing this new context for development finance.