Lao PDR: $20 Million Grant Goes to Poverty Reduction Operations

August 31, 2012

US$ 20 million grant agreement for the Eighth Poverty Reduction Support Operation signed

Vientiane, August 31, 2012 – The Government of Lao PDR and the World Bank signed today the financing agreement of US$ 20 million for the Eighth Poverty Reduction Support Operation (PRSO 8). The agreement was signed by H.E Mr. Santiphab Phomvihane, Vice Minister of Finance for the Lao PDR and Ms. Keiko Miwa, Country Manager of the World Bank in Lao PDR. The program aims at supporting policies and institutional reforms that enable the sustainable management of increasing revenues from the natural resources sector to deliver improved public services, which is in line with Government’s priorities outlined in the National Socio-Economic Development Plan. The PRSO 8 is the first operation of the third programmatic series of operations that builds on the strong results of the previous series of operations with total grant disbursements of US$ 68 million since 2004.

“This PRSO series comes at a critical time, as Lao PDR’s economy benefits from abundant natural resources, which if managed well, may put the country on a sustainable and inclusive medium-term growth path.” said Keiko Miwa, Country Manager for the World Bank to Lao PDR. “With appropriate macroeconomic and governance policies, the country’s natural resource wealth can make a significant contribution towards poverty reduction and sustainable growth’.

Since 2004, seven annual PRSOs (two series) have contributed to the government’s policies to foster economic growth, reduce poverty, and address challenges in human development and vulnerabilities through supporting cross-sectoral and institutional reforms. In particular, support for public financial management reform has helped develop stronger policy control of budgetary resources and enhanced the transparency and accountability of the public finance system. Similarly, the reforms have improved the environment for investment, trade and doing business.

To ensure impact and results from previously supported reforms, this third PRSO series continues support in some policy areas while aiming to selectively support new areas of reform. Specifically, PRSO 8 focuses on five policy areas equally critical for the sustainability of Lao PDR’s development path, which increasingly relies on natural resources development. These key policy areas aim to:

  • Strengthen macroeconomic policy coordination and management that is responsive to developments in the natural resource sectors and consistent with economic growth and stability;
  • Strengthen public financial management in the natural resource sector for improved budget credibility, orderliness and participation, as well as sector budget allocation and reporting;
  • Support sustainable revenue management in the natural resource sector, particularly in the mining and hydropower sectors. This will contribute to coordinated and reinforcing regulations that guide the fiscal and revenue management regimes for the sustainable development of the hydropower and mining sectors.
  • Improve public service delivery through sustainable financing mechanisms for schools and health facilities. This will translate into an increased number of births attended by skilled health personnel and an increased ratio of textbooks per pupil.
  • Improve the investment and trade climate to attract quality investment, reduce the costs of trade and facilitate diversified growth.

The PRSO is an important part of the World Bank Group's new Lao PDR Country Partnership Strategy 2012-2016, endorsed by its Board in March 2012, which aims to enhance competitiveness and connectivity, sustainable natural resource management, and inclusive development through strengthening public sector management.

Media Contacts
In Washington
Mohamad Al-Arief
Tel : 202-458-5964
In Vientiane
Souridahak Sakonhninhom
Tel : +856-21-450 010