ADB Approves US$6.4Mln for Vietnam's Poverty Reduction

ADB Approves US$6.4Mln for Vietnam's Poverty Reduction       
                                                                                                                                                       The Asian Development Bank (ADB) on December 9, 2004 approved a US$6.4 million programme-based loan to support the Vietnamese Government's poverty reduction programme.

The ADB programme will work within the policy framework of the Poverty Reduction Support Credit III (PRSC III), a programme funded by several development partners led by the World Bank in support of the Government's Comprehensive Poverty Reduction and Growth Strategy (CPRGS).                                                                           
                                                                           
The ADB support will focus on reducing structural weaknesses and improving the business environment for private sector development, promoting inclusive and environment-friendly development, and instituting a modern governance and public administration system.                                         
                                                                           
Vietnam continues to enjoy robust economic growth. In spite of the Asian financial crisis that began in 1997, GDP increased by 7.1 per cent in 2003, and is expected to grow 7.5 per cent in 2004 and 7.6 per cent in 2005.                           

"Although the country has halved poverty in about 10 years, about 29 per cent of its population is still poor - most living in the northern mountains, central highlands, and in pockets of the Red River and Mekong deltas," says Bradford Philips, Country Director at ADB's Vietnam Resident Mission.                                                                  

"Their remoteness makes it difficult to address poverty in these areas. Thus we need to take a carefully targeted approach in terms of planning and delivery to fight poverty."                                            
                                                                           
The ADB programme will strengthen Vietnam's reform programme on three fronts:

-Promote growth and create jobs by increasing internal and external competition, accelerating the divestment of SOE and State-owned commercial banks, and improving transparency and accountability in SOE operations and in the banking and the financial sector.                

-Advance human development by increasing the budget for education and adopting higher quality education standards; increasing resources to cover the health care costs of the poor; developing mechanisms to complete the transfer of land-use rights to households, especially in upland and ethnic minority areas; and supporting measures to improve environmental and water resources management;

-And increase transparency and accountability of public finances, promote simplified administrative procedures, and take measures to eliminate corruption as part of a broader effort to build modern governance.    
                                                                  
ADB's loan will contribute to financing the adjustment costs in implementing the policy framework of the PRSC III programme in support of the Government's deepened reform programme for poverty reduction.                                                                                       

The loan comes from ADB's concessional Asian Development Fund, with 24-year term including a grace period of eight years. Interest is set at 1 per cent per annum during the grace period and 1.5 per cent per annum for the rest of the term. The fund will be fully utilised by 31 December 2005. The State Bank of Vietnam is the executing agency.

• Lan Anh