A new public climate bank with a focused policy mandate on climate action supported by international development finance institutions could help Viet Nam achieve a just transition to a low-carbon and climate-resilient economy. Given the enormous and front-loaded capital needs of economic transformation, its long maturities, and the specialist technical knowledge and skills required, there is an evolving argument in the development community for creating new, specialist institutions focused directly on this task or for strengthening existing ones. This paper contributes to that debate by exploring the potential for a new climate bank in Viet Nam that works alongside existing financial institutions. It concludes that the government of Viet Nam may wish to explore the interest of international development finance institutions to support the establishment of a Climate Bank for Viet Nam by providing capital or guarantees to help it become a catalyst to mobilise public and private capital at cheap rates and become a driving force for financing a clean and just transition in Viet Nam. The legacy of the new climate bank will rest on it becoming a public policy-maximising institution. 

The authors are grateful for the helpful feedback received at the UNDP workshop on “Financing for Development – The Role of Domestic Financial Institutions” in Hanoi in December 2022 and from senior officials of banks and ministries in Viet Nam, who gave their time and insights to the research. The authors also acknowledge with thanks the guidance and feedback from Jonathan  Pincus, Senior Economist UNDP, and Diana Barrowclough, Senior Economist UNCTAD.

UNDP wishes to acknowledge the support of the United Nations Conference on Trade and Development for research contributing to this policy brief. The paper is one of several supported by the Development Account project “Mobilising Resources for a Green New Deal” led by Diana Barrowclough. 

The findings, interpretations and conclusions expressed are those of the authors and do not necessarily reflect the views of the United Nations or its officials Member States.