Regions and Countries

	Table of Contents
p. 18 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 - Viet Nam

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VII. ADB’s Operational Program

A. The Proposed Program

77. ADB’s loan and TA programs for 2001-2003 are presented in Table 1. Further details are given in Appendix 4. The program takes into account the availability of ADF resources, and Viet Nam’s limited access to OCR as Group B1 country. Subject to the availability of overall resources within ADB, the program is based on average annual commitments of $252 million in ADF and $77 million in OCR. OCR will be used primarily for projects with revenue-generating capacity, such as in the electric power sub-sector, and for blending with ADF in program loan operations. Preliminary analysis shows that the above-mentioned level of OCR lending is compatible with Viet Nam’s domestic and external debt position. Debt servicing capacity will be closely monitored on a periodic basis, and the OCR lending level adjusted if the situation so warrants. The actual level of ADB lending will depend on country performance, including the Government’s demonstrated commitment to implement policy and institutional reforms, and effectiveness in using ADB resources.

78. The program emphasizes: targeted poverty reduction interventions through decentralized projects focused on the Central Region of Viet Nam; pro-poor growth to be achieved through policy reforms in the financial and agriculture sectors, building on ADB’s earlier policy-based lending operations in these areas, and through investment in physical infrastructure, particularly in roads and power sub-sectors; natural resource management and development with particular emphasis on water resources; and social and human development mainly through initiatives in the secondary education, health and water supply sub-sectors. Subregional cooperation will be promoted through both a loan in the transport sector, and policy dialogue and TA on transborder issues. Approximately one third of the portfolio will have a geographic focus on the Central Region, in order to achieve synergy and improve implementation through mutually reinforcing operations in complementary sectors.

79. A TA program averaging 12 projects and $9.1 million per year has been defined for 2001 and 2002. The TA pipeline for 2002 and 2003 has only been partly committed, to allow some flexibility in the program, particularly since the COS is still under preparation. The TA program is guided by three priorities: (i) carrying out in cooperation with the Government the sector analysis needed to underpin the COS under preparation (particularly in the areas of poverty reduction, natural resources management, and sector development plans in both physical and social infrastructure); (ii) strengthening the loan pipeline through an adequate number of PPTAs (five are currently scheduled for 2001 and six for 2002), to allow some flexibility in responding to adjustments in processing schedules; and (iii) supporting the improvement of the governance framework through fairly large scale support in the areas of public service efficiency and administrative reform; public financial management; and legal sector capacity building and reform.

80. Based on preliminary guidelines on project classification, during the 2001-2003 period approximately 7 percent of projects (4 percent of lending amount) will be core poverty operations; 43 percent poverty interventions (38 percent in terms of amount), and 50 percent other development interventions (58 percent of lending)². With respect to the sector distribution, agriculture and natural resources will account for about 42 percent of total lending; physical infrastructure and the social sector for 19 percent each, and the financial sector, including microfinance, for the remaining 20 percent. Appendix 5 presents a breakdown of the lending program by poverty classification, cross-cutting operational priority, and sector separately for the first year (2001) and the firm program for subsequent years (2002-2003).

B. Strengthened Role of ADB’s Viet Nam Resident Mission

81. Since its establishment in 1996, VRM has been supporting ADB operations with an emphasis on consultation and policy dialogue with the Government, donor coordination, support to Headquarters operational missions, and project implementation. In 1997 it organized a high-level policy seminar on the Asian financial crisis. It conducts monthly project implementation meetings and participates in a number of overall and sector-level partnership initiatives. VRM carried out a Joint Portfolio Performance Review Mission in July 1999 with JBIC and the World Bank, followed by a Seminar on Regulations in February 2000. In April 2000, it supported, again jointly with JBIC and the World Bank, a Project Management Conference, whose outcome is likely to influence significantly, the legal and operational framework for ODA implementation.

82. The emphasis on governance improvements during the 2001-2003 period will require close contact and frequent interaction with the Government, and it is envisaged that VRM will play a key role in the design and implementation of TA operations in this area. Responsibility for programming, economic analysis and project implementation, including delegation of some ongoing projects, will also partially be shifted to VRM during this period. VRM has until now been direly undersized compared to the dimension of ADB’s program in Viet Nam. Therefore and in order to operate more efficiently in terms of office space and access to advanced information technology and telecommunication systems, VRM relocated into new and adequate office facilities in October 2000. Similarly, staff complement will be gradually increased during the program period to properly match VRM’s increased responsibilities.

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