Deputy Governor Nguyen Thi Hong meets the Alternate Executive Director of the World Bank Group of Southeast Asia

Attending the meeting, on the WB’s side were Ms. Mastura Binti Abdul Karim - Alternate Executive Director and Ms. Doan Hoai Anh - Senior Advisor of the SEA Office; on the SBV’s side, in addition to Deputy Governor Nguyen Thi Hong, there were leaders of the Monetary Policy Department, the Foreign Exchange Management Department, the Credit Department and the International Cooperation Department. On behalf of the SBV Board of Management, Deputy Governor Nguyen Thi Hong congratulated Ms. Mastura Binti Abdul Karim on her first official visit to Vietnam as Alternate Executive Director of the World Bank Group.

Ms. Mastura Binti Abdul Karim was appointed as an Alternate Executive Director of the Office of Executive Director of the World Bank Group of Southeast Asia, which represents the constituencies of Brunei Darussalam, Fiji, Indonesia, Lao PDR, Malaysia, Myanmar, Nepal, Singapore, Thailand, Tonga, and Vietnam, in July 2017. Prior to joining the Executive Director’s office, Ms. Karim was the Deputy Under Secretary (Investment Evaluation), for the Strategic Investment Division at the Ministry of Finance in Malaysia. She had also served as the Assistant Director for the Distribution Sector of the Economic Planning Unit at the Prime Minister’s Department.

The Alternate Executive Director of the SEA Group thanked Deputy Governor Nguyen Thi Hong for taking the time to meet the delegation. Ms. Karim emphasized that the delegation's visit to Vietnam from January 29-30, 2018 was part of a working plan with the 11 member countries of the SEA. After Vietnam, the delegation would continue to work in Myanmar and Malaysia with the main objective being to strengthen cooperation with the governments of the member countries. At the meeting, Ms. Karim briefed Deputy Governor Nguyen Thi Hong on a number of recent WB activities. In particular, she talked about the main issues that will be discussed at the forthcoming Spring Conference, such as: raising capital as well as the review of the equity shares of the member countries.

Overview of the meeting

Deputy Governor Nguyen Thi Hong thanked Ms. Karim's for the shared information on the World Bank's orientations and objectives in the coming time in order to improve the coordination between the parties. The Deputy Governor stressed that the SBV always appreciated the WB for its support and cooperation with Vietnam. Although Vietnam has become a middle-income country and has graduated from the grant and preferential loan program (IDA), the WB has allowed Vietnam to have a 3-year transitional period and to delay the accelerated repayment until 30 June, 2019.

Reportedly, the WB Board of Executive Directors will review the IDA transition mechanism of Vietnam at the IDA18 Mid-Term Review Meeting in late 2018, SBV Deputy Governor Nguyen Thi Hong suggested that the WB continue to support Vietnam to extend the debt repayment schedule to ensure Vietnam's sustainable protection of the economic achievements and allow Vietnam enough time to prepare the additional budget for the accelerated repayment.

For its part, Vietnam has completed the receipt of all IDA preferential loans allocated by the WB to Vietnam during IDA17 period. Specifically, Vietnam has completed the negotiations for all IDA loan programs and projects worth nearly USD 3.8 billion. In the 2017 fiscal year, Vietnamese Government completed the negotiations for all 12 programs/projects, 8 of which have already been signed, and the remaining 4 programs/projects are actively undergoing necessary procedures for the loan Agreement signing. However, since the public debt ceiling of Vietnam has approached the threshold allowed by the National Assembly (65% of the GDP), the relevant authorities are reviewing all programs/projects, which have had the investment policies approved, and have proposed options to resolve the problems in signing the loan agreements for the remaining 4 programs/projects of the 2017 fiscal year. This content has been reported by the SBV to the Government for guidance.

In addition, to provide maximum support for Vietnam to access the WB funding in the context of IDA graduation, Vietnam requests the WB: (i) to increase support in terms of policy advice, especially the national development experience models to avoid the middle income trap, and to support Vietnam to implement the recommendations in the Vietnam 2035 Report; (ii) to mobilize to maximum the non-refundable aid from other partners to increase the number of independent technical assistance projects for Vietnam; (iii) to provide technical assistance, grants associated with the IBRD loans to increase the preferential components and reduce the borrowing costs on the WB loans to support non-revenue generating areas (such as poverty reduction projects, social protection, healthcare, education, agriculture, etc.), and the provinces that are not yet in good conditions to access to IBRD loans under market terms; and (iv) to seek new funding sources for Vietnam, especially commercial financing that do not require a government guarantee (e.g. co-financing with AIIB).

SBV Deputy Governor Nguyen Thi Hong stated, Vietnam welcomes the World Bank's continued introduction of new financial products, which has given Vietnam the opportunity to coordinate with the WB in the coming time in the development of new products, to ensure that the products are suitable with Vietnam's conditions and priorities, for example products on strengthening the finance mobilization capabilities for the local governments towards the goal of self-reliance for investment financing and self-repayment... or to create products which are suitable for different segments of the economic sectors.

VA