The State Bank of Vietnam yesterday signed an agreement with the World Bank for a $500 million loan, sourced from the International Bank for Reconstruction and Development (IBRD), to support local economic stimulus and public investment reform. The 25-year loan is the biggest ever made by the WB to the Southeast Asian country and the first by IBRD, the low-interest lending arm of the WB, the Vietnam News Agency said. As a part of a larger aid package worth $1 billion from the IBRD, the loan aims to support public investment reform and speed up the implementation of various projects to enhance the impact of Vietnam’s stimulus package to sustain the high economic growth. The remaining amount is expected to be disbursed by the end of 2010, the agency added. 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. Vietnam has experienced a succession of shocks over the past two years, starting with massive capital inflows in 2007, a surge in commodity prices in 2008 and export declines as a result of the global economic crisis. Stimulus measures adopted in late 2008 and supplemented in early 2009 contributed to strong growth, now estimated to be 5.32% this year. Previous WB support to the Southeast Asian country had come from the International Development Association which provides credits and grants to the poorest countries. Vietnam has virtually been endorsed an elevation to middle income status after it hits a per capita income of $1,025 for two consecutive years.
