World Bank says Vietnam economy still declining
HANOI - World Bank officials in
Vietnam said on Thursday that economic growth in the
communist country for 1998 would be worse than
expected, but that speedy reform could counter some of
the problems.
They said that in the absence of solid reform the general
economic situation would continue to worsen in the last
quarter and that this year's gross domestic product
growth would be down to 3-5 percent.
Hanoi revised downwards its 1998 growth target in July
from 8.8 percent to 6-7 percent.
Andrew Steer, the bank's director in Vietnam, said it
was very difficult to predict Hanoi's needs but that the
bank remained committed to the country.
``The key question is are there sources of growth that
have so far not been evident?'' he said at a news
conference held by a group of World Bank executives.
``I think that Vietnam is currently in an extremely difficult
situation, but I sense that there is a serious awareness of
that situation,'' he added.
Steer said the World Bank was ready to provide Hanoi
with up to $580 million annually over the next five years,
in addition to around $2 billion it has committed since
1993.
He added that further funds could be made available to
help counter social costs that may arise from such
reforms as restructuring of the cumbersome state-owned
enterprises.
``We are willing to provide additional funds if the
strength of policy reform is greater,'' Steer said.
``Vietnam is not a country where you can buy reform. It
is very different from other countries in the region in that
regard.''
The World Bank and other multi-lateral lending
institutions have routinely complained that the pace of
reform in Vietnam has been too slow.
Kazi Martin, senior World Bank economist in Hanoi,
said some important steps had been taken to liberalise
trade and boost privatisation, but that much more was
needed.
On Monday, Premier Phan Van Khai said there were
clear signs of economic decline.
Social purchasing power and export markets were
shrinking, export growth was the lowest for seven years,
foreign investment was down significantly and mounting
unemployment was causing increasing problems, he said.
In late September the World Bank's Board of Executive
Directors met to adopt the Vietnam Country Assistance
Strategy.
The bank's priorities would now include focusing on
poverty and social issues, building stronger links
between projects and policy dialogue, and greater
decentralisation for project implementation.
Reuters - October 01, 1998.
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