The World Bank Board of Executive directors on May 17 approved a $125 million credit to assist HCM City in strengthening its institutional foundations for sustainable urban development.
This is the World Bank’s first budget support operation to a subnational entity in Vietnam, marking a strategic shift in the bank’s engagement at the subnational level from sector-specific investments to supporting cross-cutting policy and institutional reforms.
The policy programme aims to remove institutional bottlenecks to enable Vietnam’s largest city and economic powerhouse to address some of its most pressing urban governance challenges.
As a key growth pole driving economic modernisation and generating 21 percent of Vietnam’s gross domestic product, the benefits of reforms in HCM City are expected to go beyond the city to the wider economy.
“As an emerging global megacity and commercial hub with significant opportunities, HCM City is also facing a host of serious urban challenges,” said Ousmane Dione, World Bank country director for Vietnam.
He added that the successful management of rapid urban growth requires effective and integrated urban governance as well as adequate investment in urban infrastructure and service delivery. These interventions will have to be made within a constrained fiscal environment, reinforcing the urgent need for efficient resource mobilisation and allocation.
The policy programme is designed to institute integrated cross-sectoral reforms in areas that are crucial for the city’s urban development including land use planning, fiscal governance, wastewater management, public transport and economic competitiveness.
The programme is structured around three pillars: integrated and transparent spatial information for urban management; strengthened management of public assets and liabilities; and enhanced delivery of priority municipal services.
This is the first time a citywide, integrated policy dialogue has been established to ease coordination among the city’s various departments and contribute to the design and timely adoption of critical institutional reforms.
The credit is provided by the International Development Association, a financial institution of the World Bank that offers concessional loans and grants to the world’s developing nations.
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