The European Investment Bank (EIB) has provided a 100 million EUR (140 million USD) loan to Vietnam to help deal with the effects of climate change in the country.

An agreement to this effect was signed by Deputy Minister of Finance Tran Xuan Ha and the EIB Director for Lending Operations in Asia, Francisco de Paula Coelho, in Hanoi on May 26.

According to the European Commission’s Delegation in Hanoi, this is the EIB’s fifth operation in Vietnam and its second lending programme with the Ministry of Finance (MoF), which received a 30 million EUR credit line in 2005 to finance small- and medium-sized projects.

Speaking at the signing ceremony, Coelho said that Vietnam has a lot of potential to mitigate climate change as it manages agricultural production well, has a large amount of forests and is improving its energy efficiency in construction and industry.

The MoF Deputy Minister said that the loan confirms that the international community of donors and the EIB have confidence in Vietnam’s future potential for development, especially in overcoming problems arising in the economy.

According to the agreement, the MoF will act as a borrower but will allocate the credit to four state-owned banks, including the Bank for Investment and Development of Vietnam (BIDV), the Vietnam Development Bank (VDB), the Vietnam Bank for Agriculture and Rural Development (Agribank) and the Vietnam Bank for Industry and Trade (Vietinbank).

The banks will then give loans to borrowers to put projects into action. At least 70 percent of the loans will be used to combat climate change through projects in the renewable energy and energy efficiency sectors. The remaining 30 percent will be spent on supporting Europe’s presence in Vietnam through direct transfers of technology and know-how from Europe.

Set up in 1957, the European Investment Bank is the EU’s long-term financing institution that promotes European objectives. The EIB now operates in the 27 EU member states and more than 130 other countries throughout the world./.