Socialist Republic of Vietnam

HA NOI — Viet Nam’s economic and institutional reforms, poverty reduction and growth schemes were scheduled to top the agenda at the mid-year Consultative Group Meeting opening on Thursday in Sa Pa.

The forum, expected to draw senior Government officials and about 50 international donors to Viet Nam, was expected to concentrate on the opportunities and challenges facing Viet Nam and the country’s progress in disbursing Official Development Assistance (ODA) funds.

Director of the World Bank in Viet Nam, Klaus Rohland, said donors were working closely with the Government to speed up development projects throughout the country.

"We have seen good progress in the last six months but more remains to be done if Viet Nam is to make full use of its access to ODA resources," he said on the eve of the forum.

Rohland said both the Government and international donors had to work harder at getting funds out faster and more efficiently, "harmonising" the different channels of disbursement.

He warned that given Viet Nam’s annual GDP growth rate of about 7 per cent, the country would only be eligible for concession loans as one of the world’s "poorest nations" for another 10 years.

"Viet Nam should make effective use of its concession loans before it is required to meet the harsher terms of international commercial loans," he said.

"The pressure is that you have only 10 years ahead to make the best use of these ODA resources."

A World Bank report released on Tuesday said Viet Nam was reducing poverty rates "at a very rapid pace".

According to the report 29 per cent of the population is now characterised as poor, down 8 per cent from five years ago.

However, poverty rates fluctuate widely from region to region and between rural and urban areas.

While the report noted poverty rates in urban areas averaged only 7 per cent that figure jumped to 36 per cent in rural areas, home to about 76 per cent of the population.

The World Bank’s lead economist on Viet Nam, Martin Rama, said on Tuesday the overall economic outlook for Viet Nam continues to be favourable.

He said Viet Nam’s real GDP was expected to sustain a growth rate of 7 per cent this year, driven by buoyant domestic demand and reflecting strong confidence among the business community and consumers.

Increasing exports in the first five months of the year have been another important source of growth, Rama said.

The World Bank estimates matched Ministry of Planning and Investment figures released earlier this month, putting Viet Nam’s GDP growth at nearly 7 per cent, fuelled by a 31.3 per cent rise in exports and a 15.6 per cent increase in domestic industrial production value.

The ministry’s deputy minister, Nguyen Bich Dat, has predicted Viet Nam’s GDP would top 7.5 per cent this year given a forecast growth of 8 per cent and with inflation running at less than 5 per cent.

"The economic tasks for 2003 are all high at a time when the economy faces emerging unfavourable events," Dat said.

However, the World Bank warned fallout from SARS on the tourism industry could cut into Viet Nam’s GDP growth by between 0.2 and 0.4 per cent. — VNS