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The Vietnam News

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[Year 2002]

World Bank approves plan for up to dlrs 3 billion in lending for Vietnam

HANOI - The World Bank will provide up to dlrs 3 billion of low interest loans over four years to Vietnam as the communist country transforms itself into a market economy, the bank said Wednesday. The loan scheme is the bank's largest concessional funding to any poor country outside of India, country director Andrew Steer said.

It "reflects the extraordinary potential, and opportunities, that exist in Vietnam," Steer said in a statement. "We believe that Vietnam, if it stays on the right track and addresses the challenges that lie ahead, can meet its development objectives in the coming years." The World Bank said its lending plan is based on the government's anti-poverty and economic growth strategy finalized in May, and will support the transition to a market economy, equitable development and good governance.

The plan calls for dlrs 300 million to dlrs 760 million in funding per year, the Washington-based bank said. The amount the bank lends is customarily determined by how well the money is used and whether targets are met. Vietnam began market reforms in the late 1980s following a disastrous experience with collectivized agriculture and a centralized command economy. Foreign investment initially surged, but then sagged as investors became discouraged by the slow pace of reforms.

But reforms have accelerated in the past two years, and Steer said there is no longer any doubt that Vietnam will move firmly toward a market economy. Vietnam plans, however, to retain about 2,000 state-owned enterprises, down from nearly 6,000 now. Many of the state enterprises are overstaffed, technologically backward and heavily indebted. Less than 40 percent are profitable. There was no immediate reaction from the government.

The Associated Press - September 4, 2002