A new 100 million US dollar (610 mio. DKR) credit to support Vietnams economic reforms and poverty reduction efforts was approved by the World Banks Board of Executive Directors last week (22 June).
The 100 million dollar Third Poverty Reduction Support Credit (PRSC 3) from the International Development Association, the no-interest lending arm of the World Bank, helps further reforms set out in the countrys Comprehensive Poverty Reduction and Growth Strategy, which the Government adopted in May 2002. The strategy lays out a plan to complete the transition to a market economy; make development inclusive; and to build a modern governance system.
– The good macroeconomic situation and the continued progress in poverty reduction confirm that the overall development strategy of Vietnam is working well, said Klaus Rohland, World Bank Country Director for Vietnam. – Looking ahead the Government needs to continue its impressive reform program. Issues surrounding the financial sector and State owned Enterprises should be high on the agenda, he added.
Vietnams poverty rate fell to 29 percent, down from 37 percent in 1998, and 58 percent in 1993. Yet, the poverty level and its trend over time vary greatly across regions.
– Progress has been substantial in the Mekong delta. It has been more limited in the Northern Mountains, and the Central Highlands have seen the least progress. These disparities highlight the importance of policies for inclusive development, like those supported by the proposed Poverty Reduction Support Credit, Mr. Rohland stated.
Mr. Rohland added that international donors confirmed their commitment to align their support for Vietnam with the governments strategy at a recent mid-year meeting in Hanoi and that the credit itself was the product of collaboration of more than a dozen ministries and agencies.
The newly approved credit strengthens the reform program to better allocate resources, create jobs, and promote economic growth through promoting greater internal and external competition, accelerating the divestiture of state-owned enterprises and banks, improving transparency and accountability in state-owned enterprises and in the banking sector, and establishing a sound regulatory framework for policy lending by the Government.
With this credit, the Government will also have the support to adopt higher standards for education and increase the overall budget allocations for health and education, including covering the costs for health care for poor people and completing the transfer of land-use rights to households, especially in upland and ethnic minority areas. The credit also support measures to improve the management of the environment and water resources.
Finally, the program supports greater transparency and accountability for public funds, including simplifying administrative procedures and steps to reduce corruption.
Co-financiers to the PRSC 3 include the Asian Development Bank, the Canadian International Development Agency, Denmark, the European Commission, the Japan Bank for International Cooperation, Netherlands, and the British Department for International Development.
The International Development Association Credit is being extended at standard IDA terms, with a 40-year maturity and a 10-year grace period.
The Bank on the Bank
The World Bank strongly supports Vietnams efforts in attaining Vietnams localized Millennium Development Goals and targets.
The World Bank provides three type of services to Vietnam: (1) design and financing of development projects; (2) analytical work, policy advice, and technical assistance; and (3) donor dialogue facilitation.
In addition, every year the Bank co-chairs the Consultative Group (CG) meeting in which all donors gather to discuss the aid program for Vietnam.
Since reengaging in Vietnam in 1993, the World Bank has supported 35 projects to help fight poverty in Vietnam through finance for agriculture, infrastructure, health programs, schools, and other essential needs.
During the last 10 years, 3,8 billion US dollar has been committed to Vietnam, of which 1,7 billion has been disbursed. This makes Vietnam the largest IDA-only borrower in the world.
Kilde: www.worldbank.org
