Donors pledge $5 bln soft loans, grants to Vietnam

HANOI, Vietnam - International aid donors pledged $5 billion in low-interest loans and grants to Vietnam on Friday, with the total falling slightly from last year because Japan has frozen aid until the communist country takes effective measures to tackle corruption.

Last year, donors pledged $5.4 billion in official development assistance to booming Vietnam, which has recorded economic growth of at least 7 percent annually over the past decade.

On Thursday, Japan, which has provided more development aid than any other country to Vietnam, said it would make no new loans to Vietnam next year.

The announcement came after four Japanese executives pleaded guilty last month to paying $820,000 in bribes to a Vietnamese official overseeing a highway project in Ho Chi Minh City, the country's southern commercial and financial hub.

Tokyo has said it would only resume providing aid to Vietnam when effective anti-corruption measures are in place.

Other donors also raised concern about corruption, as well as the recent arrests of two Vietnamese journalists.

"The events of the last six months have raised concerns with respect to whether the media is being encouraged to actively report on corruption within the government," said James Adams, vice president of the World Bank.

Minister of Planning and Investment Vo Hong Phuc replied that the journalists "were arrested for breaching laws, not because they were fighting corruption."

Phuc praised international donors for their support in the face of a deepening global economic downturn.

"In spite of difficult times and the financial crisis, most countries have increased their aid commitment to Vietnam," Phuc said. "This reflects the donors' support for the policies of the Vietnamese government."

The World Bank became the largest aid donor, with a pledge of $1.66 billion, and the Asian Development Bank pledged $1.57 billion. The European Union will give $893 million.

Over the past three years, donors have pledged a total of $13.6 billion in development aid to Vietnam, of which over $6 billion has been spent, mostly on infrastructure projects, according to the government.

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