ADB has approved a five-year US$500 million loan to Vietnam to help the economy counter the adverse impacts of the global economic downturn.

Workers of Cho Lon Plastics Company in Ho Chi Minh City assemble bikes on Sep. 14, 2009. The Asian Development Bank approved Sep. 15 a US$500 million loan to bolster the Vietnam economy amid of the global economic downturn. (Photo: SGGP)

The lender said in a statement issued the same day that the loan from its Countercyclical Support Facility will provide budgetary support for the country to finance critical public expenditure programs in 2009 and 2010.

The announcement wrote, “Vietnam has been severely affected by the global economic downturn brought about by the slump in foreign direct investment, exports, and remittances.”

Economic growth is projected between 4% and 5% in 2009, a marked slowdown from an average of 7.6% in the past 4 years. Economic growth below 5% could lead to higher unemployment and under-employment among the young labor force, the statement wrote.

“The loan will allow the Government to meet its financing needs and support economic growth in a fiscally responsible way during a challenging period for the global economy,” Arjun Thapan, director general of ADB’s Southeast Asia Department, said in the announcement.

“The Government will be better able to protect its social spending and poverty alleviation programs and objectives, and continue with its longer-term development objectives in 2009,” Thapan added.

Vietnam has announced a set of temporary stimulus measures that it would advance infrastructure projects to generate jobs; cut tax and defer tax payments to support business and boost domestic consumption; provide credit guarantees and other measures to keep the credit flowing; and increase its budget for social welfare to assist the poor and vulnerable groups.

According to the ADB, the global crisis has affected the Vietnamese government’s access to financial markets for budget financing.

The Countercyclical Support Facility, established in June 2009, supports ADB’s developing member countries that need to increase fiscal spending to counter the global economic crisis.

ADB has approved CSF loans to the Philippines and Kazakhstan.

VietNamNet/SGGP