The Loan Agreement was signed on behalf of the Socialist Republic of Vietnam by H.E. Mr. Truong Chi Trung, Deputy Minister of Finance, and was signed on behalf of Kuwait Fund for Arab Economic Development by Mr. Hesham Al-Waqayan, Deputy Director-General of the Fund.

The project aims at supporting the rural economic and social development and poverty reduction by improving the basic rural infrastructure in selected 10 poorest communes in Da Bac district of Hoa Binh province.

The project consists of the construction and upgrading of inter commune rural roads, small-scale irrigation schemes, and social facilities, which include schools, kindergartens, health care centers, public potable water supply collection points, local markets, reception office, and communal buildings for ethnic minority people, with the following main components: (1) the construction and upgrading of about 38 sections of inter-commune and inter-village rural asphalt and concrete paved roads, with a total length of about 84km, (2) the construction and upgrading of 4 reservoirs with varied capacities, (3) 8 dams with an average capacity of about 5000m³ each, (4) 10 irrigation canals with a total length of about 18.5km, (5) the construction and upgrading of 10 elementary and secondary schools, 5 boarding dormitories schools, (6) 4 kindergartens, (7) 3 health care centers, (8) 2 communal markets, (9) 1 reception office, (10) 4 public potable water supply collection points and 7 community communal buildings.  The project also includes consultancy services and a provision for institutional support.

The Project is expected to be completed by the end of December of year 2016.

The total Project cost, including physical and price contingencies, taxes, and interest during construction, is estimated at about 420 billion Vietnamese Dong, equivalent to about KD 5.9 million, of which the equivalent of about KD 0.7 million would be in foreign exchange, representing about 12% of the total cost of the project.  The loan provided by the Fund in the amount of KD 4 million would cover about 68% of total project cost, while the balance would be covered by the government of Vietnam.

The loan is made for a term of 22 years, including a grace period of 5 years starting as of the commencement of withdrawals from the loans, which will thus be repaid in 34 semi-annual installments, the first of which shall fall due on the first date on which interest and other charges on the loan shall fall due after the elapse of the grace period.  The loan will bear interest at the annual rate of 2%, in addition to a loan administration charge at the annual rate of 0.5%.

It is worth mentioning that by extending this loan, the Fund will have provided 11 loans to the Socialist Republic of Vietnam, as the Fund has previously provided the country with 10 loans, in a total amount of about KD 36.3 million (equivalent to about US$ 129.37 million) to assist in financing projects in various sectors. In addition, the Fund has provided to Vietnam a technical assistance in the amount of about KD 84 thousand (equivalent to about US$ 300 thousand) to assist in the carrying out of a study of the agro-industrial sector.