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p. 4 of 4 BACK | NEXT I. Current Development Trends and Issues II. Implementation of the Country Strategy and Program III. Portfolio Management Issues IV. Country Performance and Assistance Levels

Country Strategy and Program 2003-2005: Lao People’s Democratic Republic

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IV. Country Performance and Assistance Levels

A. Lending Level Proposed

25. In accordance with the performance-based allocation policy, the Government and ADB developed country-specific triggers for selection of low, base, and high lending scenarios: macroeconomic performance, financial sector reform and private sector development, environmental and social management, and portfolio performance (Appendix 1, Table A1.12). The first country performance assessment in November 2001 found that the Lao PDR met the overall performance level under the base case scenario. The assessment noted that the World Bank also considered the current performance of the Lao PDR at the base case. The national loan program for 2003-2005 comprises 10 projects amounting to approximately $161 million or an average $53 million annually, compared with the annual indicative planning figure of $45 million–$55 million, as a base case scenario. In addition, two GMS projects in the telecommunication and power sectors amounting to $35 million are included in the program period, subject to resource availability. By volume, core poverty or poverty intervention projects make up about 50% of total projects. By number, 32% of the projects have economic development as an objective; 18% each, environment and private sector development; 7% each, human resource development, gender and development, good governance, and regional cooperation; and 4%, social protection. By sector and number, transport and communications account for 30%; social infrastructure, agriculture and natural resources, and energy, 20% each; and finance, 10%. The proposed lending program is in Appendix 1, Table A1.10.

B. Nonlending Program

26. The indicative technical assistance (TA) program, of about $4.5 million annually, focuses on quality project preparation, governance and capacity building, and policy development support. The proposed economic, thematic, and sector work program provides strategic and operational guidance on ADB’s involvement in priority areas and crosscutting issues (Appendix 1, Table A1.11).

C. Summary of Changes to Lending and Nonlending Program

27. The lending program for 2002-2004 was adjusted to reflect the status of projects being prepared and resource availability: (i) a TA loan amounting to $5 million was included in 2002 to facilitate implementation of the proposed banking sector reform program (formerly financial sector development program); (ii) the indicative loan amounts were changed following changes of scope during the design phase for the proposed smallholder development (in 2002; from $15 million to $12 million), the proposed GMS: northern economic corridor (in 2002: from $20 million to $35 million), and the proposed northern area rural power distribution (in 2003: from $15 million to $30 million); (iii) the proposed roads for rural development (formerly rural access roads project II) slipped from 2003 firm to 2003 standby; (iv) the proposed tree plantation for livelihood improvement (formerly industrial tree plantation project II) was advanced from 2004 to 2003; and (v) the proposed GMS telecommunications backbone project phase I slipped from 2003 to 2004. The proposed community fund for rural development (pilot) in 2005 was dropped since the World Bank approved in June 2002 a similar project. The proposed Nam Ou river basin development has replaced this project in the program.

28. Processing schedules of several TAs slipped because of TA resource constraints, including in capacity building, rural finance, SME development, power sector development, and health sector efficiency. The proposed project preparatory technical assistance for the agriculture export diversification project was included in 2004 as the Government wishes to explore the country’s potential competitiveness in specialized commercial agriculture.

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