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Annual Report 2002 : Mekong

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Viet Nam

Economic performance

Viet Nam’s real GDP growth accelerated in 2002 to about 6.4% from 5.8% in 2001, partly due to a recovery in exports. The share of the industry and construction sectors in GDP was 8.9%, followed by the services (6.0%) and agriculture (3.0%) sectors. Domestic demand, led by consumption and investment, continued to be the main source of economic growth. The relatively high import growth of 19.5% turned the current account balance into a deficit of about 2.8% of GDP for the first time since 1999. The fiscal deficit, including onlending, was 3.5% of GDP.

ADB operations

Operational strategy: ADB’s strategy reflects the Government’s commitment to poverty reduction through growth, which has led to reduced poverty incidence from 58% in 1993 to 32% in 2000. ADB’s strategy focuses on sustainable growth through rural and private sector development; inclusive social development by mainstreaming poverty, gender, and ethnic dimensions into relevant areas of assistance, particularly secondary education and health; and good governance, especially through public administration reform and selected support for public financial management. A focus on the poor provinces in central Viet Nam will promote more balanced regional development through community-level livelihood projects and infrastructure expansion.

Policy dialogue: Policy dialogue supported the preparation of the Government’s Comprehensive Poverty Reduction and Growth Strategy, approved in 2002, including background papers on health and governance, and regional consultations on poverty strategies. ADB supported measures to improve the administration of official development assistance and other development projects. Three program loans provided a forum for policy dialogue on agriculture research and extension, money and capital markets, insurance and leasing, and modernization and human resource development in public administration. At the midterm Consultative Group Meeting in May 2002, ADB, Japan Bank for International Cooperation, and World Bank launched the country pilot to harmonize loan assistance proce- dures, prioritizing procurement, financial management, environmental and social safe- guards, and portfolio management.

Loans, technical assistance, and grant: Eight loans totaling $323.5 million for seven projects—five public sector and two private sector—were approved in 2002, including Viet Nam’s component of the regional GMS project for developing tourism; developing the financial and agriculture sectors and upper secondary education; promoting housing finance; and improving the power sector (two private sector loans) (see box on page 57). Fifteen technical assistance totaling $9.3 million and two grants of $11.1 million were approved (see tables 1, 6, 7, 10, 24, 25, and 36 in the Statistical Annex).

Project implementation: Since joining ADB in 1966, Viet Nam has received 58 loans totaling $2,679.3 million, of which 39 were active at the end of 2002. Contract awards totaled $221.5 million, bringing the cumulative figure to $1,348.7 million. The contract awards ratio for 2002 was 20.8%—lower than ADB’s average of 22.6%. Disbursements in 2002 totaled $238.4 million, bringing cumulative disbursements to $1,228.4 million. The disbursement ratio was 20.8%—lower than the ADB-wide average of 22.2% (see tables 14–23 in the Statistical Annex).

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