Poverty Reduction Support Credit III

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This Third Poverty Reduction Support Credit (PRSCIII) Project seeks to implement Vietnam's Comprehensive Poverty Reduction and Growth Strategy (CPRGS), and, provides further support to Vietnam's reform program. The project shall strengthen the reform program on several fronts: 1) promotion of greater internal and external competition, to endorse an acceleration in the divestiture of State-owned enterprises (SOEs) and State-owned commercial banks (SOCBs). Additionally it aims at improving transparency and accountability in SOE operations, and in the banking sector, while supporting the establishment of a sound regulatory framework for policy lending by the Government. These measures should improve the allocation of resources, economic growth and job creation. 2) The project will also promote human development, through an expanded budget appropriation, and higher quality standards for education, through resources for health care costs of the poor, and through mechanisms to complete the transfer of land-use rights to households, especially in upland and ethnic minority areas. Further measures will improve environmental and water resources management. 3) In an effort to build modern governance, increased transparency and accountability of public finances, simplified administrative procedures, and steps towards curbing corruption will be pursued. Other actions aim at revamping planning processes, moving towards the alignment of policies, and resources to attain well-specified development goals. However risks include financial aspects, and governance practices, particularly as it regards the incomplete structural reform, which could jeopardize growth and stability in the long term. Also, the introduction of market forces in the social sectors, and decentralization are pressing service delivery, leading to increased inequality, with a less inclusive growth. And, there is a fiduciary risk associated with this project, if inadequate progress on budget transparency occurs; however, the Government recently embarked in an anti-corruption strategy.