The funding, provided by the Australian government and administered by the World Bank Group, adds to the Australia-World Bank Group Strategic Partnership - Phase 2 (ABP2) that focuses on supporting Vietnam’s development agenda through knowledge sharing and policy advising.

The partnership, first commenced in 2012, aims to share knowledge and strengthen policies and programs for selected development priorities in Vietnam. The first phase of the partnership, from 2012 to 2017, boasts several key achievements, including improved national connectivity and access to markets, increased sustainable access to clean water and sanitation, and improved poverty reduction strategies for rural communities. The second phase, from 2017 to 2021, aims to further progress Vietnam’s priority economic reforms by targeting five key issues: trade and competitiveness; transport; Mekong Delta climate resilience; alongside gender and ethnic minorities.

The additional $3.43 million "will help address emerging challenges and critical needs across Vietnam post Covid-19," said Ousmane Dione, World Bank country director for Vietnam, adding that by providing support in key areas like private sector development, trade integration and innovation, the program aims to help the country’s economy gain back its full potential in the fastest and most sustainable way.

The program of work takes forward part of the AUD10.5 million ($7.2 million) commitment from Australia to Vietnam to boost Covid-19 recovery, discussed between Australian Ambassador to Vietnam Robyn Mudie and Vietnam's Minister for Planning and Investment Nguyen Chi Dung on June 5.

Vietnam, despite its internationally acclaimed response to the novel coronavirus pandemic, has taken heavy hits across all sectors, making its initial economic expansion target of 6.8 percent a challenge to achieve, said Prime Minister Nguyen Xuan Phuc at a National Assembly session last month. The country's economic growth in the first quarter amounted to only 3.8 percent.

People have also been struggling to find jobs, with many mostly reliant on unemployment benefits. The number of people filing for unemployment in May surged 44 percent year-on-year to 157,900, according to the Ministry of Labor, Invalids and Social Affairs. Around 26,000 companies also suspended their business in the first five months, a 36 percent increase. In the worst case scenario, the number of workers affected by the pandemic could rise to 7.2 million in the second quarter, the ministry estimated.

The country has recorded 352 Covid-19 cases so far, with 23 remaining active and no deaths. No community transmission has been recorded in over two months.