The Asian Development Bank (ADB) has approved a US$100 million policy-based loan to develop Viet Nam’s finance sector, aiming to support long-term economic growth and tackle rising income inequality.

ADB said the programme was consistent with the government’s Socio-economic Development Strategy in the 2011-20 period and ADB’s Strategy 2030 in addressing remaining poverty and income inequality.

ADB Financial Sector Economist Duong Nguyen said Viet Nam’s economic performance in recent years has been impressive but reforms remained incomplete, especially in the finance sector. In addition, the limited levels of financial inclusion could exacerbate rising income inequality and impact long-term sustainable economic growth.

“This programme will support the Government’s efforts to strengthen financial stability, develop domestic capital markets and enhance financial inclusion,” said Duong.

The programme supports several government reforms to strengthen and broaden the outreach of Viet Nam’s formal finance sector. These include improvements in the legal and regulatory framework to resolve non-performing loans and restructure weak credit institutions, the creation of an enabling environment for the money market and government bond market and policy measures to introduce a market-based approach to financial inclusion through microfinance and financial technology.

ADB is committed to achieving a prosperous, inclusive, resilient and sustainable Asia and Pacific region while sustaining its efforts to eradicate extreme poverty. In 2017, ADB’s operations totaled $32.2 billion, including $11.9 billion in co-financing. — VNS