Countries and Regions

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p. 7 of 7 BACK | NEXT I. Current Development Trends and Issues II. Implementation of the Country Strategy and Program III. Portfolio Management Issues IV. Country Performance and Assistance Levels

Country Strategy and Program Update 2006-2008: Lao People's Democratic Republic

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IV. Country Performance and Assistance Levels

A. Lending Level Proposed

27. The lending level from the Asian Development Fund (ADF) ($52.8 million in 2005–2006) is now based on a modified performance-based allocation system. The allocation to the Lao PDR declined under ADF IX because of the removal of the ”collar” which, under ADF VIII, allowed countries to retain historic levels of lending. In addition to the biannual country-level ADF allocation for the Lao PDR, there is scope for additional ADB financing for GMS projects using the ADB-wide set-aside for subregional cooperation. The Lao PDR is eligible for grant financing of up to 50% of the ADF IX program, plus potentially incremental financing for projects related to HIV/AIDS and other infectious diseases. Potential financing from ordinary capital resources (OCR) is being explored for projects with appropriate revenue-generating characteristics. The proposed lending program is in Appendix 1, Table A1.10.

B. Nonlending Program

28. Proposed annual technical assistance of about $3.5 million will focus on project preparation and capacity development in priority areas, while considering the recommendations of the special evaluation report completed by the Operations Evaluation Department (OED) in 2004. The proposed nonlending program is in Appendix 1, Table A1.11.

C. Summary of Changes to Lending and Nonlending Program

29. The lending and nonlending assistance programs for 2006–2008 were adjusted to reflect project preparation and ADF resource availability, including grants. The title of the loan and PPTA for the public administration reform program was changed to the public resource management program and the title of the ADTA for public service delivery efficiency was changed to integrated financial management and governance. These changes were designed to reflect a shift in focus from overall public administration issues to more focused fiscal management matters. The title of the ADTA for provincial institutional strengthening in education management was changed to sector-wide approach (SWAP) in education development, to reflect a shift in the Government’s focus. In consultation with the Government, the following loans for ADF financing and technical assistance proposed to be financed from ADB’s resources have been added to the assistance pipelines.

1. ADTA: Capacity Building for Private Enterprises Development (2006 standby/2007 firm)
2. PPTA/Loan: Education SWAP (2007 for PPTA/2008 standby for lending)
3. ADTA: Enhancing Government Accounting Regulations and Procedures (Phase III) (2007 firm)
4. ADTA: Support to Integrated Framework for Trade-related Technical Assistance (2007 firm)
5. ADTA: Northern GMS Energy Sector Study (2007 firm)
6. ADTA: Design of Environmental User Fees (2008 firm)
7. ADTA: Institutional Strengthening in Health Sector Development (2008 firm)
8. ADTA: Making Markets Work Better through Economic Integration (2008 firm)
9. PPTA: GMS Northern Region Power Supply (2008 firm)

30. It is also proposed that the possibility of funding Luang Prabang airport improvement (firm 2008 for lending) through OCR be assessed through a PPTA (firm for 2006). For reference, the 2005 assistance program for lending products and the 2005 assistance program for nonlending products and services are provided in Tables A4.1 and A4.2, respectively.

31. In order to prioritize grant allocations to projects that directly address MDGs—particularly the nonincome MDGs 2-7 stressed in ADB’s 2004 poverty reduction strategy review—the following firm projects and programs are proposed for “full” grant financing.

1. Basic Education Sector Development Program (2006 firm)
2. Health Sector Development Program (2007 firm)
3. Northern and Central Region Water Supply and Sanitation Sector (Phase II) (2008 firm)

32. In addition, the following projects and programs are proposed to be financed partially by ADF grants to address the income MDG 1 and needs for soft funds for capacity development:

1. Participatory Livestock Development (2006 firm)
2. Shifting Cultivation Stabilization II (2007 firm)

33. It is also proposed that the Lao PDR portion of the GMS project for communicable disease control in border areas receive an ADF grant from the ADB-wide “HIV/AIDS and other infectious diseases” pool.

34. Completion of the new CSP is scheduled for 2006, and it will guide the strategic priorities of ADB’s operations for the period from 2007 to 2011. The new CSP will be aligned with the Government’s NGPES and the new 5-year NSEDP, 2006–2010. It will incorporate the MfDR concept and the findings of OED’s country assistance program evaluation.

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