US$320Mln Credits Inked to Support Reforms, Poverty Reduction

US$320Mln Credits Inked to Support Reforms, Poverty Reduction

The two credits are the third Poverty Reduction Support Credit (PRSC 3) worth US$100 million, and the Urban Upgrading Project worth US$222 million.

"These two credits demonstrate once again the commitment of the WB and other donors in supporting Vietnam's economic growth and poverty reduction. In the months ahead, we will broaden and deepen our reform agenda. We intend to work closely with the WB and the donor community to monitor the process and its outcomes," Governor Le Duc Thuy said in his remarks at the signing ceremony.

Donors join hands in support to economic reforms and efforts to help the poor and the disadvantaged

"Preparations for PRSC 3 have built on the strong donor commitment to support Vietnam's reform agenda. At the same time, nationwide implementation of the CPRGS has further galvanised interest for the reform programme among many donors," said Klaus Rohland.

"Co-financiers of the PRSC process have played an important role not only in providing grant financing as a complement to International Development Association (IDA) loan funds, but also through their involvement in the policy dialogue with the Government," he added.

Co-financiers to the PRSC 3 include the Asian Development Bank, the Canadian International Development Agency, Denmark, the European Commission (EC), the Japan Bank for International Cooperation, Netherlands, and the United Kingdom's Department for International Development (DFID).

The US$100 million PRSC 3 backs reforms set out in the Government's Comprehensive Poverty Reduction and Growth Strategy. The credit strengthens the reform programme 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.

Ambassador Markus Cornaro of the EC, said, "PRSC 3 will continue to maintain the momentum for Vietnam's transition into a market economy. At the same time the credit supports measures that will ensure that growth targets also the poorest among the Vietnamese citizens and that it is socially inclusive. The foundations for building modern governance systems are also key reform areas carried forward by the PRSC process. The EC was pleased to confirm its intention to support this initiative with a grant contribution of 20 million euro, due to be finalised by October 2004".

Minister Mitsuru Kitano of the Japanese Embassy confirmed that the amount of Japan's co-financing is 2 billion yen or approximately US$18.4 million.  He said, "Through the process of formulating the policy package of PRSC3, Japan emphasised two issues, Public Expenditure Management and Improvement of Business Environment."

Ambassador Bjarne H. Sorensen of Denmark said, "Denmark has been a partner to all three PRSCs and we are happy to see that the direct poverty reduction has been more and more in focus. Furthermore PRSC 3 supports greater transparency and accountability for public funds, including simplifying administrative procedures and steps to reduce corruption."

Helps Underway to Improve Life of Urban Poor in Vietnam

The US$222.5 million credit to finance the Urban Upgrading Project aims to help reduce poverty in four cities in Vietnam by improving the living and environmental conditions of the urban poor.  A grant from the Japanese government of US$4.8 million was also signed to support capacity building under the project.
One of the largest urban poverty alleviation projects ever signed by the WB, this project will ensure that numerous low-income communities in Can Tho, Hai Phong, Ho Chi Minh City and Nam Dinh will have better living conditions by providing clean water, improved sanitation and sewerage systems, stable electricity and sufficient public lighting services. 

The project will also help reduce flooding in these areas and hence reduce environmental pollution and waterborne diseases. An innovative project component will provide access to micro-credit loans to the poor to enable them to improve their houses.

"Nearly a million poor households in urban areas will benefit directly from this project, and over one million more will enjoy the extended infrastructure network and environmental improvements," said Klaus Rohland.

Through upgrading alleys and bridges, renovating markets and public toilet facilities, and improving electricity and water supply networks, the project is expected to enhance the quality of life and productivity of the urban poor, and save millions of dollars every year through reduced water leakage and electricity loss, and reduced damage due to flooding.

On behalf of the four beneficiary localities, Mai Thanh Hai, chairman of Ho Chi Minh City's People's Committee, thanked the WB as well as co-financers at the signing ceremony for their support and pledged to successfully realise the project's targets. 

WB's pledged soft loans reach to US$4.4 billion

The signing of the two credits has brought the WB's total value of preferential loans committed for Vietnam to US$4.4 billion with 44 projects and programmes and total non-refundable aid to US332 million, revised Le Duc Thuy. "We deeply acknowledge the goodwill the WB has provided to Vietnam and appreciate effective cooperation efforts of WB officers, particularly Mr Klaus Rohland, as well as great support from the governments and international organisations involved in the two credits," he concluded.

• Hai Nam