Regions and Countries

	Table of Contents
p. 7 of 20 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Lao People's Democratic Republic

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II. Country Operational Strategy

35. The last Country Operational Strategy was prepared in 1996. The main focus of ADB’s past interventions in Lao PDR was on economic growth projects in physical infrastructure. While it is still appropriate to continue to emphasize economic growth projects, some major critical factors have emerged in recent years that require a redefinition of ADB’s approach to its operations in Lao PDR. First, during the economic growth process, income disparities have rapidly increased. Some people, particularly ethnic groups, in the remote and mountainous areas have been insulated from the economic activities and still remain poor. This implies the need for policies to pursue more balanced growth in Lao PDR. Second, a preliminary analysis indicates that the efficiency of public investments has declined. Consequently, the Government needs to deepen reforms, particularly in public expenditure management. Lastly, there is an increasing concern on adverse environmental impact of some physical infrastructure projects.

36. ADB’s new Country Strategy and Program (CSP), based on its new Poverty Reduction Policy, is planned for 2001. The new CSP will fully reflect the Government’s Socio-Economic Plan for 2001-2005. The key to this process is a poverty analysis (PA) undertaken in 2000 jointly with the Government, in consultation with other donors including the World Bank. The PA will analyze the nature and main determinants of poverty in Lao PDR, with the attention to ethnic minorities in remote and mountainous areas. The initial findings of the PA, together with the Mid-term Expenditure Framework/Public Investment Program, will be discussed during the Seventh Round Table Meeting (RTM) to be held in Vientiane in November 2000. The RTM will serve as the High Level Poverty Forum as envisaged in ADB’s Poverty Reduction Strategy. In addition, discussions in the RTM will also provide important building blocks towards the Poverty Reduction Strategy Paper of the World Bank/International Monetary Fund (IMF) to be prepared by the end of 2001. Following the RTM, ADB will formulate the new CSP to maintain the momentum built-up during the RTM process. Strategic indicators would then be integrated into a Partnership Agreement, providing the analytical and monitoring milestones for the ADB supported poverty reduction activities in the country.

37. While it is still early to identify the precise direction of the new CSP at this stage, there are a number of strategic directions to be considered in formulating ADB’s operational programs. These are:

1. increasing efficiency of development activities through continued structural reforms and enhanced governance related activities;

2. the need for greater emphasis on rural development, especially the need to increase rural productivity and to reduce poverty in remote and rural areas;

3. development of human capital through initiatives in education and health sectors;

4. sustainable natural resources management and environmental protection;

5. geographical and integrated planning focus of project interventions in order to build synergies between its own activities and increase developmental impact; and

6. greater community participation in the selection and design of ADB interventions. ADB’s loan and TA program, which has been formulated for 2001-2003 in close consultation with the Government, duly takes into account these future strategic considerations.

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