Contacts:
In Hanoi: Nguyen Hong Ngan (84-4) 934 6600 – 234
nnguyen5@worldbank.org\
Hanoi, July 29, 2007 – The State Bank of Vietnam and the World Bank in Vietnam have today signed the financing agreement and related documents for the Seventh Poverty Reduction Support Credit (PRSC 7) worth US$ 150 million in concessional credit for Vietnam. Subject to confirmation, 12 donors are expected to co-finance the credit, bringing the total amount of resources channeled to the government budget close to US$ 370 million.
“Providing long-term finance is important in these difficult times, when the trade deficit of Vietnam is still large and there is considerable turmoil in world financial markets” said Martin Rama, acting country director for the World Bank in Vietnam. “Together with the generous co-financing provided by other donors, this credit will help the government succeed in its efforts to stabilize the economy and attain the goals of the Social Economic Development Plan (SEDP) 2006-2010. PRSC 7 was in fact approved in recognition of the country’s progress over the year in business development, social inclusion, natural resources management and modern governance, which are also the pillars of Vietnam’s SEDP.” In business development: The credit endorses the Government’s establishment of consultation and information gathering mechanisms to identify the social and environmental impacts of WTO accession. The Government has also assessed the scope and nature of lending and other transactions among affiliated parties within Economic Groups and General Corporations. In financial sector reform, the Government has approved equitization plans allowing participation of strategic investors for two SOCBs and completed the equitization of one of them. It has also adopted market-based pricing systems to estimate the costs of state-funded civil engineering investments. In social inclusion, PRSC 7 recognizes the Government’s efforts to revise tuition fees at secondary and tertiary levels, better reflecting market conditions, and enhance policies to protect the poor. At the same time, a health insurance law which better pools risks and allows improved incentives in payment to service providers has been submitted to the National Assembly for consideration. A voluntary pension program for farmers and informal sector has been introduced, allowing for support for the poor to participate in the program. And the Government has determined institutional responsibilities for the implementation of the Gender Equality Law and monitoring of gender equality. Regarding natural resources management, the guidelines for forest development based on participatory land-use planning and independent monitoring have been issued. At the same time, institutional responsibilities for integrated river basin management have been assigned. As for modern governance, the credit acknowledges the Government’s actions in establishing criteria for selecting public investment projects and mechanisms to monitor their financing and implementation. It also recognizes the issuance of regulations on content and timing of disclosure of audit reports of the State Audit of Vietnam, including audit reports of individual entities, as well as implementation of an asset declaration requirement for senior officials and their immediate families, with penalties for non-compliance. Subject to confirmation, PRSC 7 is expected to receive further financial support from the Asian Development Bank, Australia, Canada, Denmark, the European Commission, France, Germany, Ireland, Japan, the Netherlands, Spain, and the United Kingdom, bringing the total commitment for PRSC 7 close to 370 million USD. The World Bank also envisages that up to US$ 5 billion in IDA and IBRD resources could be channeled to support Vietnam’s development over the next three years. The actual level of commitments will depend, among others, on Vietnam’s progress in improving its economic policies and strengthening its institutions. For more information on the projects, please go to the Projects and Program section, on www.worldbank.org/vn
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