Countries and Regions

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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 2004-2006: Lao People’s Democratic Republic

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IV. Country Performance and Assistance Levels

A. Lending Level Proposed

24. With reference to country-specific indicators, the Lao PDR was assessed as performing at or slightly above the base case in 2002. Macro performance, and environment and social management were at the base case level; and financial sector reform and portfolio management were somewhat above the base case. As a result of the performance-based allocation (PBA) exercise, $42.3 million of ADF resources was allocated to the Lao PDR for the 2003 lending program. The Government and ADB have developed country-specific triggers for the PBA, which will be reviewed in late 2004 (Appendix 1, Table A1.12).

25. The proposed 2004–2006 program has been prepared assuming an annual base case of about $40 million–45 million ADF, subject to the future PBA process and resource availability. In addition, five GMS projects including four ADF projects with a total amount of $53 million and one ordinary capital resources (OCR) project (NT2 project)³ of up to $20 million have been included for the period 2004–2006, subject to resource availability and the country’s absorptive capacity. Depending on ADF resource availability in 2004, the ADF lending program will need to be reviewed. The issue will be revisited and confirmed during the Country Program Confirmation Mission. The 2005 and 2006 ADF lending program will depend on the outcome of the discussions regarding ADF replenishment.

26. The proposed pipeline was prepared to reflect the strategic thrust and geographical focus identified in the CSP, in consultation with the Government and other development partners. Attention was paid to implementation of NPEP through focusing on its priority sectors (agriculture, transport, and social sectors) and private sector development. By number, social infrastructure, agriculture and transport sectors account for 25% each, energy for 17%, and finance and industry sectors about 8%. By volume, core poverty or poverty intervention projects make up about 53% of total projects. By number, 28% of the projects have economic development as an objective, 19% for private sector development, 14% each for environment, and gender and development, 11% for regional cooperation, and 6% each for human development, and good governance. The proposed lending program is in Appendix Table A1.10.

B. Nonlending Program

27. The indicative annual TA program of about $4 million focuses on quality project preparation in priority areas, governance and capacity building, and policy development support. The TA programs will be further refined once the ongoing northern region strategic action plan becomes available. In order to allow flexibility in reflecting new developments, the TA programs in 2005–2006 are currently under-programmed. The proposed economic, thematic, and sector work program was prepared to provide strategic and operational guidance on ADB’s future involvement in key sectors and to strengthen analysis of crosscutting issues (Appendix 1, Table A1.11).

C. Summary of Changes to Lending and Nonlending Program

28. The lending program for 2003–2005 was adjusted to reflect the status of projects being prepared and resource availability: (i) the proposed tree plantation for livelihood improvement project slipped from 2003 to 2004; (ii) the proposed northern and central water supply and urban development project (formerly northern and central water supply and sanitation project) slipped from 2004 to 2005 and increased its indicative loan amount from $15 million to $25 million in order to accommodate the expanded scope (urban development component); (iii) the proposed participatory livestock development project and the proposed Nam Ou river basin development project slipped from 2005 firm to 2005 standby and from 2005 standby to 2006 standby, respectively; (iv) the proposed basic education development project was advanced to 2005 standby while the proposed health sector development project slipped from 2005 standby to 2006 standby; (v) the proposed SME development project was advanced to 2005 standby; and (vi) the proposed GMS: Nam Theun 2 hydropower development project was listed in 2004, replacing the formerly power sector development project in 2005. Processing schedules of some project preparatory TA were adjusted according to changes of loan processing timing, including in the areas of agriculture, education, health, and SME development.

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