Yesterday, the Vietnamese Ministry of Finance and the Ho Chi Minh City Investment Fund for Urban Development signed an agreement under which the latter is to receive US$50 million from the World Bank to develop the city’s urban infrastructure until 2012.
This is the first time the World Bank has extended a loan to a municipal fund in Viet Nam.
As established in the agreement, loans to aid Ho Chi Minh City’s development will be granted on the following conditions:
• the projects must be feasible,
• the business owners must be able to meet payment schedules, and
• the projects must involve the private sector.
Earlier, in Ha Noi on November 16, the World Bank and the State Bank of Viet Nam, the country’s central bank, signed the $50 million credit agreement for Ho Chi Minh City.
"A US$50 million line of credit is not so large for an urban infrastructure investment fund, but it is especially important because sustaining growth, both in HCMC and in Viet Nam generally, will require a huge investment in infrastructure," said World Bank’s Director in Viet Nam, Ajay Chhibber.
The loan comes from the International Development Association, a lending arm of the World Bank offering loans to low-income countries. The loan to the central bank carries an annual interest rate of 4% and a 25-year term, with a 10-year grace period.
