Agriculture, development of basic social services, and private sector development are among the priority sectors for the Lao People’s Democratic Republic in ADB’s Country Strategy and Programme (CSP) update endorsed by its Board of directors.
Seven firm loans are programmed for the country in 2006-2008, totalling almost US$75 million. The Lao PDR will also participate in projects amounting to about US$100 million for the Greater Mekong Subregion (GMS).
“Regional cooperation is critical to the country’s development,” says James Nugent, ADB Country director in the Lao PDR. “Connectivity initiatives under the GMS such as economic corridors, power interconnection, subregional tourism that benefits the poor, transport, and flood management will ensure that the Lao PDR remains landlinked rather than landlocked.”
Final lending levels from ADB’s concessional Asian Development Fund (ADF), a loan facility for ADB’s poorest member countries, depend on the performance-based allocation system, among other factors. Under the ADF IX programme, the Lao PDR is eligible for grant financing of up to half of its ADF programme, plus potentially incremental financing for projects related to HIV/Aids and other infectious diseases.
Potential financing from ordinary capital resources is being explored for projects with appropriate revenue-generating characteristics.
Complementing the ADF allocation, technical assistance grants are proposed totaling about US$3.5 million annually, focusing on project preparation and capacity development in priority areas.
Development of the poor northern provinces remains a strategic priority of the programme for the Lao PDR, while programme focal sectors include rural development, human resources, building governance, sustainable environmental management, and private sector development.
The country’s gross domestic product is projected to grow at 6-7% annually for the period 2005-2007, underpinned by the planned expansion of gold and copper mining projects and the construction of the Nam Theun 2 hydroelectric project. Nam Theun 2 is expected to start producing electricity for export in late 2009, which will further accelerate growth.
“The recent approval of Nam Theun 2 requires a slight shift in focus within the CSP’s operational priorities,” says Nugent. “In the area of governance and capacity building, further emphasis will be given to public financial management to support implementation of the Nam Theun 2 revenue arrangements.”
CSPs define ADB’s medium-term development strategy as agreed with the country. A CSP update is prepared every year taking into account the continued relevance of the CSP, its implementation, and ADB’s operational programme.
Completion of a new CSP for the Lao PDR is scheduled for 2006, to guide ADB’s strategic priorities in the country from 2007 to 2011.