MANILA, PHILIPPINES - The Asian Development Bank (ADB) will provide a $100 million loan to Viet Nam to support policy reforms aimed at fostering economic growth and reducing poverty.
ADB Board of Directors today approved the loan, in various currencies, from ADB's concessional Asian Development Fund (ADF).
A wide range of policy reforms in the areas of business development, social inclusion, natural resource management, and governance will be supported by the loan. It is a parallel loan to the World Bank's Poverty Reduction Support Credit (PRSC) 8 and ADB's sixth loan to Viet Nam within the framework of the PRSC process.
The PRSC process is made up of several closely-related activities jointly undertaken annually by participating development agencies to help Viet Nam carry out policy reforms needed for the successful implementation of its poverty reduction strategy. The World Bank coordinates PRSC activities for participating development agencies.
Viet Nam's poverty levels have declined drastically in the past 20 years as a result of the country's rapid economic growth and improved social protection programs. However, the absolute number of poor people is still quite large and the incidence of poverty is relatively high in rural areas and among ethnic minorities.
The global economic crisis has threatened to undo some of the progress in poverty reduction that the country has made in recent years.
"To overcome the adverse impact of the crisis and meet the remaining challenges of poverty reduction, Viet Nam needs to press ahead with policy reforms that foster socially inclusive and environmentally sustainable economic growth," said Bahodir Ganiev, Country Economist for ADB's Viet Nam Resident Mission. "The ADB loan is intended to support such reforms."
ADB's loan has a 24-year tenor, with a grace period of 8 years carrying an interest charge of 1%, rising to 1.5% over the balance of the term. The State Bank of Viet Nam is the executing agency for the overall program with the loan to be fully utilized by end May 2010.