The loan is providing flexible budget support to the Government while reinforcing selected structural reform priorities in the government’s Socio-Economic Development Plan.
The operation supports a program of concrete policy reforms across three pillars contributing to the government’s efforts to:
(i) Maintain macroeconomic stability. Strengthening financial sector governance and fiscal management, including policies for non-performing loans and promoting the restructuring of banks, and debt and treasury management;
(ii) Create a more transparent, efficient and accountable public sector. Strengthening public administration, state-owned enterprise management and public investment management for more transparency and improved regulatory environment; and
(iii) Improve the business environment. Reducing administrative burdens and strengthening tax and procurement policies, including streamlined administrative procedures.
“With this third operation, the World Bank continues its support to enhance Vietnam’s competitiveness thereby laying the foundation for future growth and prosperity,” said Achim Fock, the World Bank’s Acting Country Director for Vietnam.
“During the last five years, there has been steady progress in advancing structural reforms in critical areas such as the banking sector, SOE management, and the business climate. These reforms need to be sustained during the implementation of the new five-year plan 2011-2016 to unlock Vietnam’s full growth potential,“ he noted.
The loan is financed by the World Bank’s International Bank for Reconstruction and Development, the financing window for middle-income countries. The US dollar-denominated loan is a LIBOR based, fixed spread loan with 29.5 years maturity, including a grace period of 10 years.
The operation, EMCC-3, is concluding a series of three. The first EMCC supported a number of pieces of legislation and government decisions to promote reforms including prime ministerial decisions to restructure General Corporations and State Economic Groups; strengthen supervision in the banking sector; and strengthen the institutional framework for debt management.
The Laws on Tax Administration and Anti-Corruption were amended to introduce new provisions aimed at improving public administration.
The EMCC-2 built on those to promote increased foreign participation in the banking sector and adopt a plan to address non-performing loans; strengthen medium-term debt management and improve the efficiency of public financial management; promote restructuring of State Economic Groups and improve transparency in state-owned enterprises; and strengthen the legal framework for public procurement, value-added tax and corporate income tax.