The World Bank has approved two credits worth US$500 million in total to support economic management reforms in Vietnam and develop infrastructure in its northern mountainous region.
The first $250 million credit will be given to the second Economic Management and Competitiveness development policy operation to strengthen financial sector governance, public administration, SOE management, and tax policies.
“This program supports reforms that should help address some of the binding constraints to private sector investment. Promoting a stronger role for the private sector in the economy is critical for Vietnam’s future growth.” Victoria Kwakwa, World Bank Country Director for Vietnam, said in a statement.
The program aims to promote increased foreign participation in the banking sector, strengthen medium-term debt management, and promote restructuring of state economic groups.
It will also improve the legal framework for public procurement, value-added tax and corporate income tax.
The second $250 million credit will fund the National Urban Development Program in the northern mountains region using a new approach to financing that links funds directly to results.
Seven cities in the region, which is lagging with the highest concentration of extreme poverty in the country, will participate in the program.
“The growing urban centers in Vietnam’s northern mountains region play a key role in local area development, serving as economic and administrative hubs, commercial centers for regional or cross-border trade,” said Kwakwa.
“Sustainable urban planning and development of these cities offers a significant opportunity to reduce poverty and realize more inclusive growth in this lagging region,” she said.
The participating cities will receive funds for specific measures to enhance their management capacity and for developing local infrastructure such as roads, bridges and drainage, as well as for upgrading low-income areas.
The Ministry of Construction will coordinate and oversee the program and provide technical assistance to the cities.
The World Bank’s financing instrument called the Program for Results links disbursements of funds directly to the delivery of verifiable results.