Vietnam Poverty Reduction Support Credit 9

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The Ninth Poverty Reduction Support Credit (PRSC) Program is the fourth in a five-year cycle aimed at supporting the implementation of the Socio-Economic Development Plan (SEDP). PRSC are well-suited to address the challenges Vietnam currently faces. This operation aims to maintain the momentum for the reforms needed to transform Vietnam from a transition to a middle-income country. Emerging from massive poverty at the launching of Doi Moi in 1986, Vietnam is now on the verge of becoming a middle-income country. There was a noticeable acceleration, starting around 2001, in the government's drive towards relying on market mechanisms, building a multi-stakeholder economy and further integrating with the region and the world. Over these years, comprehensive economic reforms have led to rapid economic growth and remarkable progress on poverty reduction and other development outcomes. The share of the population living below the poverty line fell by nearly half; from 28.9 percent in 2002 to only 14.5 percent by 2008. Many of the remaining poor are from disadvantaged groups (e.g. ethnic minorities) or live in more isolated regions. Attaining middle-income status is seen as more than a threshold level of Gross Domestic Product (GDP) per capita, but as a way to emphasize the need for a set of modern institutions. It entails further financial deepening to support capital mobilization, the regulation of access to and pricing of infrastructure services, the gradual development of modern social insurance, more effective tools for environmental protection, legal and judiciary reforms, and the effective governance, among others. The SEDP 2006-2010 approved in June 2006 articulates this vision. As this PRSC cycle draws close to the end, the Government of Vietnam and development partners have approached the World Bank to discuss possible successor operations to PRSC. The form of such operations is still under discussion, but one possibility is an overarching instrument, which is focused on macroeconomic and a few cross-cutting issues, accompanied with more in-depth sectoral development policy operations, which would drill down to second generation reforms. A preparatory study is currently underway for this purpose. The World Bank is committed to providing assistance in a broad spectrum of areas, including social sectors, even as the country joins the ranks of middle-income countries. Studies of other countries' experiences and in-depth analysis of debt management and sustainability are currently conducted jointly with the government so as to find the best partnership strategy for the country for the coming years.