WASHINGTON, June 25, 2010 – The World Bank’s Board of Executive Directors has approved four credits totaling US$456.5 million in support of Vietnam’s development efforts. This brings the total of World Bank lending to Vietnam this fiscal year (see below *1) to US$2.13 billion, a record figure.
The credits are all provided by the International Development Association (IDA) – the part of the World Bank that helps the world’s poorest countries. IDA aims to reduce poverty by providing interest-free credits and grants for programs that boost economic growth, reduce inequalities and improve people’s living conditions.
As Vietnam approaches middle income status, the country needs a skilled population with a strong knowledge base in order to position the country well for economic expansion and integration into the global economy. Creating a higher education system in Vietnam that is innovative, responsive to the demands of the market and of high quality is essential to the economic growth and development of Vietnam. This is the principle behind one of the four approved credits; the Vietnam New Model Universities Project.
The project aims to set up and pilot a new policy framework for the governance, financing and quality assurance of one new model university. This will help Vietnam develop a model for a higher education system that is innovative and of high quality as well as geared towards developing marketable skills for young people entering the labor market.
“Human development is recognized as one of Vietnam’s three key areas of focus in its coming 10 year strategy.” says Victoria Kwakwa, the World Bank’s Country Director for Vietnam. “The modern higher education system must contribute directly to this pillar by improving the quality of higher education so that graduates will possess the knowledge and skills that meet labor market demands.”
The credits approved by the World Bank’s Board also includes the 9th Poverty Reduction Support Credit (US$150 million), which is the fourth in a five-year cycle aimed at supporting the implementation of the SEDP (see below *2). This credit aims to continue the reforms needed to transform Vietnam from a transition economy to a middle-income country. It will promote reforms in the areas of (a) state sector, (b) financial sector, (c) education, (d) health, (e) gender, (f) water and sanitation, (g) environment, (h) public financial management, (i) legal development, (j) public administration reform, and (k) anticorruption.
A sum of US$100 million will be used to assist Vietnamese Government agencies with capacity building to plan and prepare public investments efficiently and ensure international quality standards. A project preparation facility will be established that can be drawn upon to undertake, for example, feasibility studies, detailed designs, and procurement for projects across all development sectors.
And finally, US$26.5 million provides additional financing for the System Efficiency Improvement, Equitization and Renewables Project. The original project has improved efficiency of the transmission system and rural energy access and contributed to reforming the power sector. The additional financing will be used to scale up the project’s impact on power sector reform.
*1 World Bank’s fiscal year starts at July 1, and ends on June 30.
*2 Vietnam’s Social Economic Development Plan