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ADB, Viet Nam Sign Three Loans Totaling $96.4 Million for Education, Financial Sector Reforms, and Poverty Reduction

HANOI, VIET NAM (20 December 2004) - The Asian Development Bank (ADB) and the State Bank of Viet Nam (SBV) today signed three loans totaling $96.4 million to help Viet Nam achieve universal quality secondary education, reform the financial sector, and further reduce poverty.

Governor Le Duc Thuy represented the State Bank of Viet Nam, while Bradford Philips, Country Director at ADB's Resident Mission in Viet Nam, signed for ADB.

The $55 million loan for the Second Lower Secondary Education Development Project will help the Ministry of Education and Training (MOET) complete the introduction of the new curriculum and textbooks, as well as related in-service teacher training. ADB has been playing a leading role among development partners in the field of secondary education.

Targeted support will be given to the poor, ethnic minority, and female students. The project will cover as many as 28 disadvantaged provinces for civil works and all provinces for quality enhancement activities. It will directly benefit about 366,000 students, of which 266,000 are disadvantaged and 100,000 are returning students from school dropouts, as well as about 72,500 teachers and education administrators.

The total cost of the project is $80 million, of which 69% comes from the ADB loan and $25 million from the Government. MOET is the executing agency of the project.

A $35 million loan was also signed for the second subprogram of the Second Financial Sector Program Loan (FSPL II).

The FSPL II was formulated in 2002 to address the need for alternative means of finance to support Viet Nam's broad-based economic growth and socioeconomic development objectives. The subprogram II will continue to support the Government's effort to develop alternative channels of financial intermediation such as money and capital markets, insurance, and leasing.

The Agence Francaise de Developpement (AFD), which provided cofinancing of €23 million for subprogram I, will provide €12 million in cofinancing for subprogram II. The State Bank of Viet Nam will continue to be the executing agency.

ADB and SBV also signed a $6.4 million program-based loan to support the Government's poverty reduction program. The loan is to support the policy framework of the Poverty Reduction Support Credit (PRSC) III, a program funded by several other development partners led by the World Bank in support of the Government's Comprehensive Poverty Reduction and Growth Strategy (CPRGS).

The PRSC III program will strengthen Viet Nam's reform program on three fronts: (i) advancing the transition of Viet Nam's economy to a market economy by reducing structural weaknesses and by improving business environment; (ii) promoting socially inclusive development; and (iii) modernizing governance.

ADB's loan will contribute to financing the adjustment costs in implementing the policy framework of the PRSC III program in support of the Government's deepened reform program for poverty reduction. The State Bank of Viet Nam is the executing agency for this loan.

"These three loans address key issues in the development of Viet Nam", said Mr. Philips. "To achieve the common goals of the Projects, ADB looks forward to the Government of Viet Nam's leadership in ensuring effective implementation of the loans with full and active participation of all key stakeholders."

All the three loans come from ADB's concessional Asian Development Fund, with 24- year term (except for the $55 million education loan which carries a 32-year term) including a grace period of eight years. Interest is set at 1% per annum during the grace period and 1.5% per annum for the rest of the term.

During 2004, ADB has approved 6 loans totaling $296.4 million and 15 technical assistances amounting to $7.3 million grants for Viet Nam. These figures exclude regional projects and private sector operations.

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 worth US$6.1 billion and US$177 million, respectively, of which $179 million in loans and $8.6 million in technical assistance were for Viet Nam.

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