The Government of Lao PDR and the World Bank Group last week signed two separate agreements worth up to US$50 million. The agreements provide World Bank funding which will benefit small-medium firms (SMEs), hydro power and mining.
The first agreement is aimed at making more credit available to small businesses in Laos through the Small and Medium Enterprise Access to Finance Project. The new support includes a US$10 million grant, US$10 million credit and US$12 million in risk sharing funds. The project will provide long-term credit to the small firms with the view to helping them expand their job creation and productive activities.
“The ceremony today (August14) reaffirms the commitment and cooperation between the Government of Lao PDR and the World Bank in supporting government priorities as outlined in our National Socio-Economic Development Plan. SMEs, hydropower and mining sectors form an important part of the Lao economy. The two projects will contribute to the socio-economic development and environmental sustainability of Lao PDR,” said vice minister of finance of the Lao PDR, Thipphakone Chanthavongsa.
The government and the World Bank Group also signed an agreement to support Lao PDR in the further development of the hydropower and mining sectors. Additional financing of US$17.8 million for the Technical Assistance for Capacity Building in the Hydropower and Mining Sectors Project will help improve the effectiveness of government institutions and build capacity in these sectors. This financing builds on the achievements of the original grant of US$8 million approved in 2010, and a grant of US$2.54 million from the Australian Department of Foreign Affairs and Trade.
This project aims to improve human resource capacity and the performance of government oversight institutions in both the hydropower and mining sectors. The project has already put in place important building blocks for the effective management of hydropower and mining development, and has supported the development of policies, regulations and guidelines for better governance of the two sectors.
The project has assisted in strengthening the government’s ability to address key challenges in these sectors through technical advisory services and training, and by creating platforms for inter-governmental cooperation. The project has also assisted the Ministry of Energy and Mines in establishing a legal framework and management tools, such as standard concession agreement documents for hydropower and mining, fiscal policy options, hydropower management models, and the Policy on Sustainable Hydropower Development.
“Financing for small firms is vital for the Lao economy. It will help to create more jobs and increase family incomes and revenues. Equally important will be the sustainable use of Laos’ wealth of hydropower and mining resources. The World Bank Group is pleased to offer its strong support for these two projects and looks forward to continuing our close partnership with Lao PDR,” said World Bank’s country director to South East Asia Ulrich Zachau.