ADB’s new assistance strategy for the Lao People’s Democratic Republic (Laos) in 2007-11 follows the government’s Five-Year National Socio-Economic Development Plan and will focus on core priorities in the country, including agriculture, health, education and infrastructure.

The strategy addresses critical constraints to pro-poor growth and social development by concentrating ADB support on basic education and preventative health services, smallholder agriculture diversification and commercialisation, and improving the business climate for small and medium-scale enterprises. This will be combined with a major effort to improve public sector financial management.

“ADB is repositioning its work in the Lao PDR to sharpen its focus and boost the impact of its development assistance,” says Rajat Nag, director general of ADB’s Southeast Asia department. “We will also be working closely with the government to improve governance and strengthen the country’s financial systems.”

During the first three years of the Strategy, ADB will offer US$60mn in loans and grants directly to the Laos government, and another US$40mn to the country under the Greater Mekong Subregion programme. Five technical assistance grants, totalling around US$10mn, are also expected.

“The figures for ADB’s assistance are lower than in previous years,” says James Nugent, country director for ADB’s resident mission in Laos. “The Lao PDR government’s commitment to improved public sector financial management, together with the country’s robust economic growth, indicate that support could increase again in the years ahead.”

In addition, ADB continues to work closely with other international organisations and the government on the Nam Theun 2 Hydropower Project. ADB’s focus on the huge undertaking has been to monitor the safeguard provisions and assist in strengthening the country’s ability to manage public funds to be generated by the project.

“The government has put into place mechanisms that help its development partners – including ADB – work together and stay in line with the government’s programme and needs,” adds Nugent. “Nam Theun 2 is one example of that.”

Lao PDR is one of the poorest countries in the Asia and Pacific region. Per capita gross domestic product is US$490, one third of the population is poor, and one third is illiterate. According to the ADB strategy, prospects for economic and social development are promising despite the challenges. The economy has grown and diversified in the last five years, and this trend is expected to continue.