Countries and Regions

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p. 3 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 2004-2006: Lao People’s Democratic Republic

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III. Portfolio Management Issues

A. Portfolio Performance

22. Sound progress was achieved in portfolio performance in 2002, with the Government paying greater attention to timely project implementation and quality of project performance. Twenty-three (95.8%) of 24 ongoing projects were classified as satisfactory or highly satisfactory, compared to the ADB average of 85.8%. Contract awards reached $43.2 million or 140% of projection in 2002. Disbursements reached $48.6 million or 93% of projection in 2002: the disbursement ratio was 19.54%, similar to the average for Asian Development Fund (ADF) countries. Submission of audited financial statements significantly improved, with 92.3% of projects submitting on time, compared to only 63.6% in 2001. While the current trend is impressive, it is a quite challenging task to further improve portfolio management in the Lao PDR. Project complexity has increased: most recently approved loans have activities in the remote rural areas and involve more complex community-based activities. The emerging fiscal difficulties have led to increased concerns about timely counterpart fund availability. Notwithstanding improvements in the timing of submission of audited financial statements, scope exists to further improve the quality of these statements. The quarterly portfolio review meetings and the annual country portfolio review in October 2003 will address these matters. Implications of the increasing project complexity in portfolio management will also need to be given more attention during the project processing stage.

B. Performance Monitoring and Evaluation

23. Of the seven projects postevaluated between 1998 and 2002, two projects (28.6%) each were classified as highly successful and successful, respectively. No project has been classified as unsuccessful over the past 5 years. A special evaluation of capacity building technical assistance (TA) in the Lao PDR is ongoing. Lessons learned from postevaluation findings will be appropriately reflected in the formulation and implementation of future projects and programs. These include the following: (i) project design should take into more account local conditions; (ii) the formulation of policy reforms should consider the capacity of the executing agency; (iii) realistic capacity-building components should be appropriately reflected in the project design; (iv) the Government’s ownership of the project/program is essential; (v) sufficient time and resources should be allocated for addressing environmental and social concerns prior to project implementation; and (vi) interventions in one sector should be better linked to interventions in other sectors.

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