The World Bank (WB) said Wednesday it has approved a $500-million loan from the International Bank for Reconstruction and Development (IBRD) to support stimulus effort and public investment reform in Vietnam. The loan is the largest ever made by the WB to the Southeast Asian country and the first by IBRD, the low-interest lending arm of the WB, the Washington-based bank said in a press release. With the newly-approved loan which has a maturity of 25 years, Vietnam has moved a step closer to its goal of reaching middle-income status by 2010.
“It is a significant milestone for Vietnam – a country which has shifted from the category of ‘highly indebted poor country’ to middle income status in less than seven years,” said WB Deputy President for the East Asia & Pacific region Jim Adams.
He added that the policy development loan aimed at addressing weaknesses in public investment processes highlighted during the recent macroeconomic turbulence to enhance the impact of Vietnam’s stimulus package to sustain the high economic growth.
The areas strengthened under the reform program include environmental screening of publicly funded infrastructure projects, environmental management, project preparation and appraisal, procurement, public financial management, the regulatory framework for private participation in infrastructure and monitoring and valuation.
“The quality of Vietnam’s future will depend on the reforms,” said WB Country Director for Vietnam Victoria Kwakwa.
The loan approval builds on the recent Country Partnership Strategy (CPS) Progress Report which takes stock of progress made in implementing the five-year CPS that will conclude in June 2011 and introduces some adjustments for the remainders of the period.
These adjustments include the introduction of IBRD borrowing potentially up to $1.7 billion during the next year and a half, improvements in natural disaster response, climate change adaptation and mitigation, a framework for public-private partnerships for infrastructure, higher education reform and technology innovation.
Previous WB support to Vietnam had come from the International Development Association which provides credits and grants to the poorest countries.
