Countries and Regions

	Table of Contents
p. 6 of 20 BACK | NEXT I. Country Performance Assessment A. Economic Performance Assessment B. Poverty Assessment C. Assessment of Socio-Environmental Performance D. Governance: Sound Development Management E. Implementation Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Lao People's Democratic Republic : I. Country Performance Assessment

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E. Implementation Assessment

1. The Portfolio

30. As of December 1999, ADB has approved 46 loans to Lao PDR for a total of about $827 million. ADB had also approved 163 technical assistance (TAs), consisting of 116 advisory technical assistance (ADTA) and 47 project preparatory technical assistance (PPTA), amounting to $75.9 million.

31. For the year 1999, contract awards totaled $14.0 million, while disbursements reached $46.8 million. The disbursement ratio for ADB-financed projects with and without program loans were 19.4 percent and 20.5 percent in 1999, compared with the ADB-wide average of 22 and 18 percent, respectively. Performance of ongoing projects in Lao PDR is generally rated as satisfactory (Appendix 2 shows information on portfolio performance).

2. Issues in Project Implementation

32. There has been gradual improvement in start-up activities during the past years. These include: delegation of decision-making, clarification of procurement procedures, and greater understanding in key agencies of donor procedures and market principles. However, there is still scope for further improvement. Government procedures should be further clarified and harmonized with key donors’ procedures. Project financial management system should be standardized and streamlined. Particular difficulties have remained in staffing of project management units. In many projects, insufficient institutional capacity continues to hamper efficient project implementation. In infrastructure projects, there is a concern on the weak capacity to implement social and environmental measures in a full and timely manner. With ADB moving more towards rural development and the social sectors which are traditionally difficult to implement, difficulties in implementation are expected to be encountered in the future. There is a critical need to carefully assess the capacity of line ministries and agencies which are responsible for project implementation and provide appropriate assistance for capacity building prior to or in parallel with loan processing in those agencies which are deemed to have weak capacity. In addition, project design needs to more closely take into account the implementation capacity of executing agencies.

33. At the same time, the current macroeconomic policy of tightening public expenditures has significant implications for counterpart fund availability and sectoral resource allocation. During the 2000 Country Programming Mission, the Government reconfirmed that all externally financed projects are priority for local counterpart financing. To-date there has been no shortfall of counterpart funds for ADB-financed projects. To improve project implementation performance, however, a time-bound action plan has been prepared during the 1999 Country Portfolio Review Mission (CPRM). The ADB’s Extended Mission to Lao PDR and more recently Lao Resident Mission (LRM) and the Office of International Cooperation (OIC) under the Committee for Investment and Cooperation in the Prime Minister’s Office have been closely monitoring implementation of the action plan through ongoing quarterly project review meetings with National Projects Directors since 1999. To resolve generic issues more effectively, ADB and the World Bank, together with the Government, are developing the possibility of joint portfolio review missions.

34. During the Country Programming Mission, the Government was informed that ADB is in the process of adopting performance-based lending in all its operations beginning in 2001. Under the new performance-based lending criteria, project portfolio performance is given increased emphasis. It is critical to improve project implementation performance from its current rating. This can be achieved through improved project design, enhanced geographical targeting, close project monitoring, and strengthened project financial management.

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