The Government of Laos represented by Vice Minister of Finance, H.E. Viengthong Siphandone, and the World Bank, represented by Country Director for South East Asia, Ms. Annette Dixon, signed in Vientiane on 9 September a grant agreement worth $20 million from the World Bank's International Development Association (IDA) for the Fifth Poverty Reduction Support Operation (PRSO5).
The fifth operation in the PRSO series aims to assist the Lao Government in implementation of the National Social and Economic Development Plan (NSEDP) through supporting reform actions. Specifically, it focuses on two broad policy areas namely protecting the poor and improving social outcomes through better public financial management system and service delivery; and sustaining growth through improvement of the investment climate, facilitating trade and management of natural resources.
The Fifth PRSO continues to underpin our objective of maintaining a sound macroeconomic environment and accelerating growth, as we navigate through the global financial crisis. This operation by IDA will provide external resources for the execution of our FY2008/09 budget, including filling in the residual financing gap of USD$20 million, said Mme. Viengthong Siphandone, Vice Minister of Finance.
As the impact of the on-going global financial crisis is being felt in Laos through the slowdown in economic growth, reduction in government revenues, lower exports and declining foreign direct investments, the Government of Laos is challenged to maintain a coherent set of fiscal and monetary policies that will help maintain macroeconomic stability.
The progress of poverty reduction in Laos over the last few years has been impressive. Credit for what has been achieved so far must go to the Government of Laos, for taking into account the multi-dimensional nature of poverty alleviation as outlined in the NSEDP, said Patchamuthu Illangovan, World Bank Country Director for Laos. Additional financing from the World Bank and other Development Partners through PRSO 5 will help bridge the budget shortfall and help cushion the impacts of the crisis and ensure that the Government of Laos is in a better position to rebound afterward, said Mr. Illangovan.
The PRSOs are series of annual operations to support policy reform in the Lao PDR and provide resources directly into the budget. The PRSO is implemented by the Government, led by the Ministry of Finance, and in addition to the World Bank who is the main donor and initiator of this instrument in the Lao PDR, is currently co-financed by the Government of Australia represented by AusAID, the Government of Japan, and the European Commission./.