Hanoi  - The Vietnamese government has announced a fiscal stimulus package to compensate for the effects of the global economic recession, Vietnamese media reported Wednesday, but analysts said it remained unclear how large the package was and whether it would be spent in an effective manner.

The package includes an order to the Finance Ministry to make 1 billion dollars worth of foreign currency reserves available to high-priority development projects, many of which have been delayed by financing problems in recent months as foreign credit has dried up.

Further items reportedly include 89 million dollars for canal dredging in the Red River Delta, and interest-free credit to the country's state-owned agricultural distributors to buy up a million tons of rice in the Mekong Delta. Other specifics of the package were not yet available.

Prime Minister Nguyen Tan Dung announced the package at a cabinet meeting on Tuesday.

"I cannot say whether this is enough money to stimulate the economy or not, or whether it is a good and effective investment," said Nguyen Dinh Cung, director of macroeconomics at Vietnam's Central Institute for Economic Management. "It depends on how the government spends and controls it."

Under Vietnamese law, management of the country's foreign currency reserves is divided between the State Bank and the Finance Ministry. Earlier this fall, seeking to reassure investors of the stability of the Vietnamese dong, the State Bank said the country possesses some 20 billion dollars in foreign reserves.

Economist Le Dang Doanh said the government would need the approval of the National Assembly before disbursing foreign currency reserves controlled by the Finance Ministry. Such approval is generally a formality in Vietnam, but might slow disbursement.

Analysts said one concern was that the newly released funds might be allocated to well-connected state-owned firms and projects which would not provide effective stimulus to employment or productivity.

"They've got to address issues of state enterprise reform, and stopping a lot of the projects that are on the books that they just don't have the money for over the next few years," said Adam McCarty of Mekong Economics.

Much of the over 50 billion dollars in new foreign direct investment pledged to Vietnam in 2008 is for projects involving large components of government participation.

That government funding has been called into question in recent months as export revenues have fallen due to economic downturns abroad and the falling price of crude oil, Vietnam's top export earner and the chief contributor to the government's tax base.

In June, state-owned shipbuilder VinaShin backed out of its pledge to contribute 1 billion dollars to a 5-billion-dollar steel mill project headed by South Korea's POSCO. VinaShin's retreat was couched as part of a government inflation fighting initiative, but independent analysts said the company had been unable to raise the necessary funds.

Vietnam's export revenues fell 4.8 per cent from October to November. Imports, however, fell 7.1 per cent, shrinking the country's trade deficit and contributing to greater macroeconomic stability. (dpa)