WB supports Vietnam’s reforms to gain economic competitiveness

The WB Board of Directors approved the first Economic Management and Competitiveness Credit for Vietnam to help the country with economic management reforms for higher productivity and competitiveness.

The World Bank Board of Directors on March 19 approved the first Economic Management and Competitiveness Credit for Vietnam (EMCC 1) to help the country with economic management reforms for higher productivity and competitiveness.

The EMCC 1, the first of a series of three operations, provides US$250 million concessional financing to support reforms in seven policy areas: financial sector; fiscal policy; public administration and accountability; state enterprise management; public investment management; efficiency of the business environment; and equity and transparency of the business environment.

“Based on its successful Poverty Reduction Support Credit series, the EMCC aims to address new challenges that will raise the efficiency and competitiveness of the Vietnamese economy” said Victoria Kwakwa, the WB Country Director for Vietnam.

“I hope that the EMCC series will provide a platform for deepening and coordinating dialogue between development partners and the Government of Vietnam with a view to helping Vietnam transition to a new economic growth model, which targets competitiveness and the quality of growth.” she said.

Macroeconomic stability is a major priority for competitiveness in Vietnam, and a core objective of EMCC. The EMCC will help monitor macroeconomic policies and ensure that it supports the stabilization efforts of the government. Public Investment Management, SOE and banking sector reforms are prominent themes under the program, in line with the government’s priorities for structural reforms.

In addition, the EMCC prioritizes government efforts to streamline administrative procedures and strengthen fiscal disciplines because they are critical to productivity and competitiveness.

Vietnam implemented major reforms in the early nineties, which contributed to large gains in competitiveness that spurred rapid growth and poverty reduction. There is growing recognition, however, that the reform process has slowed down in recent years.

New reforms are needed to address major structural inefficiencies, promote more efficient use of labor and capital assets, and increase productivity across the economy. EMCC aims to support the implementation of this reform program over the next three years.