ADB to Maintain Focus on Strategic Pillars to Cut Poverty in Viet Nam

MANILA, PHILIPPINES (27 September 2005) - ADB will continue to focus on three strategic pillars of promoting sustainable growth, inclusive social development, and good governance to cut poverty in Viet Nam, according to ADB's Country Strategy and Program (CSP) update for 2006-2008 endorsed by its Board of Directors.

In addition, the CSP retains a geographic focus on the country's Central region, where poverty reduction has been slower than in other provinces, as well as enhancing Viet Nam's regional cooperation within the Greater Mekong Subregion.

Planned assistance over the period exceeds $200 million per year from ADB's Asian Development Fund (ADF), a loan and grant facility for ADB's poorest member countries. Final amounts will be determined by technical assistance (TA) projects underway to prepare investment projects.

Likewise, actual size of projects to be funded by ADB's ordinary capital resources will be known only after completion of preparatory TAs, but is estimated to amount to about $500 million annually. In addition, a total regional lending program is expected to range from $30 million to $40 million annually for 2005 and 2006 from ADF resources.

"Key development challenges for the next five years including sustaining the country's high economic growth and poverty reduction, supporting social development, generating jobs, and narrowing regional inequalities," says Bradford Philips, ADB Country Director in Viet Nam.

Projects in the pipeline include loans in the agriculture sector to develop forests for livelihood improvement and central region water resources; health and education projects, including HIV/AIDS prevention among youth, teacher development, and secondary education expansion; and industry and trade projects, including small and medium enterprise development and financial sector development.

In the transport sector, a $300 million loan is tentatively scheduled for the Metro Rail project for Ho Chi Minh City in 2008, while energy projects include Song Bung 4 hydropower development. Multisector projects will promote poverty reduction, livelihood improvements, and rural infrastructure development.

Viet Nam will also benefit from GMS-wide projects, including the Hanoi-Lao Cai Railway upgrade, a tourism project, southern coastal corridor, and GMS power interconnection.

ADB's technical assistance pipeline will support the lending program's main areas of emphasis, with about $4.7 million/per year planned in grants for 2006 - 2008.

With its stable political regime and robust macroeconomic fundamentals, Viet Nam was among the world's fastest-growing economies in 2004, reaching 7.5% GDP growth. The Government is preparing a new five-year socioeconomic development (SEDP) plan for 2006-2010 in which it targets at least maintaining this annual growth, eliminating hunger by 2010, and halving poverty (from 29% of the population in 2002).

ADB is supporting the preparation of a results framework for the SEDP, a handbook for socioeconomic development planning, consultation on the SEDP in the central region, and implementing the SEDP in three provinces.

Accordingly, ADB plans its next CSP for Viet Nam for 2006, to be jointly processed with other development partners, including the World Bank.

CSPs define ADB's medium-term development strategy as agreed with the country. A CSP update is usually prepared every year taking into account the continued relevance of the CSP, its implementation, and ADB's operational program.

From 1992 to the end of 2004, ADB provide 49 public sectors loans to Viet Nam totaling $2.94 billion and 162 TAs totaling $108 million.

Read the full CSP Update.

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