Sweden and Finland to Co-finance World Bank’s Project in Vietnam

The World Bank (WB) has approved a US $50 million interest-free credit to support the Vietnamese government’s efforts to reduce poverty among its ethic minorities and communities in remote and mountainous areas.
The new Development Policy Credit, one of three expected over the next five years will support the second phase of Vietnamese Government’s Programme 135 (P135-2), which helps speed up socio-economic development in around 1,644 of the country’s poorest communes and 2,500 poorest villages.
Resources for the credit come from the World Bank’s concessional lending arm, the international Development Association (IDA), which provides credits and grants to the world’s poorest countries.
Beside Sweden and Finland, the programme is co-financed by Australia, Ireland, the UK, and the International Fund for Agriculture Development (IFAD). These financiers will provide less than a third of the total cost of P135-2 through budget support to the Vietnamese Government.
Vietnam has been one of the best performing economies in the world over the last decade. Real GDP has on average grown by 7.3 percent per year during 1995-2005 and per capita income by 6.2 percent per year. Per capita income has increased from US$260 in 1995 to US$715 currently. At this pace Vietnam could enter the ranks of middle-income countries in 2010 by surpassing $1,000 per capita. According to the Vietnam Household Living Standard Survey, the percentage of people living in poverty has fallen from 58.1 percent in 1993 to 19.5 percent in 2004. The proportion of poor people now is one-third of what it was a decade ago.
However, the poverty rate among ethnic minorities and communities in mountainous areas is much higher compared to the national average. In 2004, over 60 percent of ethnic minorities were still living in poverty. The government is trying to reduce this inequality through the P135-2, which will cost around US$ 1 billion over 2006-2010.

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