``We expect annual lending to continue at 300 million dollars...But performance is absolutely key...Especially on reforms,'' said Rajat Nag, programs manager at the Manila-headquartered institution.

Nag said official development assistance (ODA) had become critical to Vietnam because of a dramatic drop in foreign direct investment.

But he warned that donors would not open their coffers unless the country's stalled reform process picked up. ``Reforms of state-owned enterprises are critical,'' he said at a press conference.

He noted that aid would not be enough to make up for lost foreign investment and that reforms must foster growth in domestic savings and capital mobilisation.

Nag predicted economic growth of between four and five per cent for 1998, nearly half last year's levels, and well below theofficial target of six to seven per cent.

The country risked even slower growth unless it tackled problems in the state sector and promoted private enterprise to create a level playing field, he said.

He urged vietnam to eliminate subsidised credit to state companies and ensure that the private sector got equal access to loans.