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ADB Plans Loans Totaling $776 Million for Viet Nam During 2005-2006

MANILA, PHILIPPINES (20 August 2004) - The Asian Development Bank (ADB) plans to lend Viet Nam about US$776 million over the next two years, according to its Country Strategy and Program (CSP) Update for 2005-2006, endorsed by ADB's Board of Directors.

Viet Nam's outlook in the short and medium term is healthy. "Endowed with natural resources, enterprising people, and located between two huge markets - the Southeast Asian nations and the People's Republic of China - Viet Nam has great potential for further economic growth and poverty reduction," says Bradford Philips, ADB Country Director for Viet Nam.

Viet Nam's economy grew 7.1% in 2003, an improvement over the 6.4% achieved the previous year.

The proposed ADB loan total is based on annual commitments of US$178 million from its concessional Asian Development Fund, which supports the sustainable development of ADB's poorest members, and about $210 million from its ordinary capital resources. In addition, $79 million is planned for subregional projects.

The final allocation will depend on availability of resources and country performance. A mix of loan and grant cofinancing from development partners will be sought to support ADB's thematic priorities.

ADB's Country and Strategy Program, approved in 2002, aims at reducing poverty by stimulating growth and employment generation through private sector development, agricultural diversification, and good governance. It also emphasizes socially inclusive development and focuses on the Central Region, which still has a high incidence of poverty.

Among the 10 projects planned for 2005-2006 are:

• Four projects in the Central Region to improve livelihoods and support rural, transport, urban, and water resources infrastructure
• Two infrastructure projects for power transmission and power sector development
• Loans for social development, including one in the education sector and one for
• One policy-based loan for small and medium enterprise development
• One supporting science and technology development for agriculture

The two-year program also includes three subregional projects for the Greater Mekong subregion for controlling communicable diseases, developing the Kunming-Hai Phong Corridor, and upgrading the Hanoi-Lao Cai Railway.

In addition, ADB plans to provide technical assistance grants amounting to about US$5 million per year to address Viet Nam's capacity building needs, project preparation, sector analysis, and institutional development needs.

Since the resumption of operations in 1993 up to June 2004, ADB has provided 44 loans to Viet Nam amounting to $2.6 billion and 148 TA grants totaling $101.21million.

Viet Nam has also benefited from ADB support to the GMS program, and ADB's private sector operations in Viet Nam.

CSPs define ADB's medium-term development strategy as agreed with the country. A CSP update is prepared every year taking into account the continued relevance of the CSP, its implementation, and ADB's operational program for the next three years. Approval of a new CSP is slated for 2005.

ADB is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 63 members - 45 from the region. In 2003, it approved loans and technical assistance amounting to US$6.1 billion and US$177 million, respectively.

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