Regions and Countries

	Table of Contents
p. 20 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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IX. Local Cost Financing

85. After the introduction of a comprehensive Budget Law in 1996, Viet Nam has been managing prudently the public budget, adjusting expenditures to match revenues, with both declining as a share of GDP. While the public investment program, and especially its externally financed components, have been largely safeguarded, preliminary indications from an ongoing public expenditure review show that compression of recurrent expenditure in key sectors is beginning to jeopardize operations and maintenance allocations, thus diminishing the effectiveness and useful life of investment projects. The Government fully appreciates the importance of ODA’s contribution to the investment program, and has indicated continuing commitment to making the local funds share promptly available. The Government also requested special ADB consideration for financing as large a share as possible of agreed projects, including local costs, and for mobilizing cofinancing sources, in order to maintain a sustainable burden on the public capital budget and allow some expansion of the needed recurrent expenditure. This would be especially true for those investments, which have a long lead time, such as social, environmental, and poverty reduction projects. Consistent with ADB's policy, a higher percentage of local cost financing will be provided for projects which address priority poverty and environment concerns and/or which are located in geographically and economically less developed regions of the country.

Back VIII. Economic and Sector Work Program	Country Assistance Plans - Viet Nam