WB facilitates inclusive, sustainable Vietnam recovery with $264 mln credit

The World Bank has approved a $263.9 million credit package from the International Development Association to propel Vietnam’s inclusive, green and digitally-driven economic recovery.

The bank said Thursday that the package aims to support households, businesses and expansion of renewable energy in the country.

The credit package marks the second and final installment in a Development Policy Financing (DPF) series of two operations, following a $221.5 million operation approved in 2021. The previous package’s goal was to help Vietnam’s recovery from the Covid-19 pandemic.

The operation is expected to fully materialize by 2024, but the DPF has already reaped some achievements.

Over 140,000 businesses received tax support through a tax relief package in 2021; more than 85,000 children have received subsidized childcare, which has promoted gender equality in the workplace; and the government’s available online services have doubled, the bank said.

It said that institutional and policy reforms supported by the operation would facilitate business recovery by enhancing the tax environment, supporting the financial inclusion of vulnerable households, and increasing access to quality childcare services.

To spur green and digital development, the reforms supported by the DPF focus on procurement, digitizing public administration, scaling up renewable energy and bolstering the financial sustainability of the power sector.

The reforms are also expected to further improve public service delivery to households and businesses.

“Reforms supported by this credit will strengthen Vietnam's ongoing recovery from the pandemic and subsequent commodity price shocks while paving the way for more inclusive, greener and digital-friendly development,” said Carolyn Turk, World Bank country director for Vietnam.

Vietnam’s economy expanded by 4.14% in the second quarter from a year ago, despite slowing global demand for imports, the General Statistics Office (GSO) said Thursday. In the first half of 2023, the economy expanded by 3.72% year-on-year, it added.

The World Bank has cut Vietnam's GDP growth forecast this year to 6% in its June edition of “Global Economic Prospects,” but the figure remains among the highest in Asia, on par with the Philippines. Previously, the bank had estimated this year's growth at 6.3%.

Vietnam’s economic growth could accelerate to 6.2% and 6.5% in 2024 and 2025, respectively, to be among the top in Asia. Corresponding figures for East Asia and the Pacific are expected to fall to 4.6% and 4.5%, the bank said.