Via IMF (Den Internationale Valutafond)

IMF Staff Completes 2019 Article IV Mission to Vietnam

April 23, 2019

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.

  • The economy remains resilient to external headwinds to date, supported by robust domestic demand from a growing, urbanizing middle class and by rising inflows from tourism, remittances and direct investment.
  • Fiscal policy consolidation during 2016-18 together with strict policies on new government guarantees and robust economic growth have put public and publicly guaranteed debt on a firmly downward trajectory.
  • The move away from administered allocation of credit and the adoption of Basel II standards by 2020 will require steps to strengthen the state owned commercial banks.

An International Monetary Fund (IMF) team led by Alex Mourmouras visited Hanoi and Ho Chi Minh City during April 3-19, 2019, to conduct discussions for the 2019 Article IV consultation with Vietnam.[1] The team exchanged views with senior officials of the State Bank of Vietnam (SBV), the Ministry of Finance (MOF), the Central Economic Commission (CEC) and other Government Agencies. It also met with representatives from the private sector, think tanks, academia and other stakeholders.


At the end of the visit, Mr. Mourmouras issued the following statement:


“The trade tensions and financial volatility affecting emerging economies in 2018 were also felt in Vietnam’s highly open economy, including through a stock market correction. Nevertheless, the economy remained resilient and growth reached a 10-year high of 7.1 percent, with the momentum continuing in the first quarter of 2019. The expansion was broad-based, fueled by healthy growth in incomes and consumption of the growing and urbanizing middle class, and by a strong harvest, a surging manufacturing sector, and inflows from growing tourism, remittances and direct investment. Inflation averaged 3.5 percent in 2018.


“The outlook for Vietnam’s economy remains sound, aided by its strong fundamentals, diversified trade structure, and by the authorities’ commitment to macroeconomic stability and private sector-led growth. However, a soft landing of growth is expected, to 6.5 percent in 2019 and over the medium term, reflecting weak external conditions. Inflation is expected to pick up slightly in 2019 on the back of administered price increases but should remain below the authorities’ four percent target.


“The budget deficit of the general government has been lowered significantly during 2016-18 relative to the pre-2016 period. The lower deficit together with strict limits on new government guarantees and robust economic growth are helping to place Vietnam’s public finances on a sounder footing. Public and publicly guaranteed debt fell to 55.5 percent of GDP at end-2018, from 60 percent of GDP at end-2016. The authorities are continuing fiscal consolidation, but the quality of fiscal adjustment should improve to create more fiscal space, narrow infrastructure and social spending gaps and meet the coming challenge of rapid population aging.


“The emergence of a corporate bond market and other capital markets in Vietnam is welcome, as are the authorities’ plans to strengthen their infrastructure. Capital markets will help to reduce the cost of capital in Vietnam and accelerate the shift to retail banking. The SBV intends to gradually move from administrative allocation of credit to market-based means and banks will adopt Basel II capital standards by January 2020. This will require strengthening the state-owned commercial banks, including arm’s length governance and higher capital buffers. Plans to modernize the monetary policy framework, including greater exchange rate flexibility to make the currency a better absorber of external shocks, are welcome. Gradual reserve accumulation should continue. To safeguard monetary and financial stability, the system of macroprudential regulations should be strengthened.


“The strong economy provides an opportunity for more ambitious structural reforms to level the playing field for the domestic private sector, tackle economic policy distortions and capacity constraints and increase investment. Administrative and licensing procedures should be reduced and the domestic private sector’s access to land and credit should be further facilitated. Greater information sharing and transparency throughout the government and vis-à-vis the public and foreign investors will help Vietnam reach full emerging market status. Ongoing efforts to address corruption are welcome. The mission urges improvements in public procurement; further strengthening of the system of income and asset declarations for public officials; and preparation for the peer review of AML/CFT implementation. IMF staff remains engaged in a wide-ranging capacity development program with Vietnam, including in fiscal, monetary, financial, legal and statistical issues, and stands ready to assist the authorities.


“The team would like to thank the officials of the SBV, MOF, CEC and other Government Agencies, as well as representatives from think tanks, the private sector and academia for the productive discussions. We would also like to thank the authorities for their generous hospitality during our stay. We look forward to maintaining the close, constructive relationship with Vietnam.


“The mission will prepare a staff report and present it to the IMF’s Executive Board for discussion in June 2019.”


[1] Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.



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