Via IMF (Den Internationale Valutafond)

IMF Staff Completes 2020 Article IV Mission to Vietnam

November 17, 2020

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.

  • Thanks to Vietnam’s swift actions to contain the health and economic fallout of COVID-19, growth this year is expected to be 2.4 percent, among the highest in the world.
  • Macroeconomic policies should remain accommodative, especially fiscal policy, until the recovery is firmly underway.
  • Given considerable uncertainty, proactively adjusting the size and composition of the policy support will be important.
  • To make the most of Vietnam’s considerable potential, continued emphasis on structural reforms is needed to boost productivity and reduce economic imbalances.

Washington, DC:
An International Monetary Fund (IMF) team led by Era Dabla-Norris had a
virtual mission during October 15 – Nov 13, 2020, to conduct discussions
for the 2020 Article IV consultation with Vietnam. The team exchanged views
with senior officials of the State Bank of Vietnam (SBV), the Ministry of
Finance (MOF), the Central Economic Commission (CEC), the Ministry of
Planning and Investment (MPI) and other government agencies. It also met
with representatives from the private sector, think tanks, academia and
financial institutions.

In addition, the SBV and IMF co-hosted a high-level seminar on “Securing
Growth and Resilience in the ASEAN: Policies for the Post-COVID-19 World”,
at the margins of the ASEAN Summit in Hanoi on November 10, 2020.

At the end of the visit, Ms. Dabla-Norris issued the following statement:

“Vietnam’s growth this year is expected to be 2.4 percent, among the
highest in the world, thanks to its decisive steps to contain the health
and economic fallout from COVID-19. The fiscal response has been largely
geared towards supporting vulnerable households and firms and has benefited
from prudent policies adopted in the past. Monetary policy easing and
temporary financial relief measures by the SBV have alleviated liquidity
pressures, lowered the cost of funding, and facilitated continued flow of

“A strong recovery is expected in 2021. Growth is projected to strengthen
further to 6.5 percent as normalization of domestic and foreign economic
activity continues. Fiscal and monetary policies are expected to remain
supportive, although to a lesser extent than in 2020. Inflation is expected
to remain close to the authorities’ target at 4 percent.

“The outlook is subject to substantial uncertainties stemming from possible
renewed outbreaks, a protracted global recovery, ongoing trade tensions,
and corporate distress, which could translate into firm closures and
bankruptcies, labor market and banking system strains.

“Given these uncertainties, flexibly adjusting the size and composition of
the policy support will be important. Fiscal policy should play a larger
role in the policy mix.

“This year, the fiscal deficit is expected to widen due to a decline in
revenues and higher cash transfers and capital spending. Fiscal support
should be maintained in 2021, with improving efficiency in execution as
priority. Over the medium-term, the emphasis should be on mobilizing
revenue for financing green and productive infrastructure, strengthening
social protection systems, and safeguarding debt sustainability.

“Monetary policy should remain supportive in the near term. Greater two-way
exchange rate flexibility within the current framework would reduce the
need to build reserve buffers and facilitate the adjustment to a
potentially more challenging external environment. The mission welcomes the
authorities’ commitment to gradually modernize its policy frameworks.

“The SBV has struck an appropriate balance between supporting the recovery
and banking system resilience. Close monitoring of risks in the banking
sector remains crucial given that capital buffers are weaker than regional
peers and uncertainties associated with the outlook. NPL recognition and
loan classification rules should be gradually normalized to support balance
sheet transparency and confidence in the banking system. Banks’ capital
positions need to be further strengthened and capital markets developed to
improve financial resilience and promote long-term financing.

“Reforms to reduce economic dualism between the domestic and FDI sectors
and lift productivity are crucial to support robust and inclusive growth.
Continued efforts to remove structural distortions and improve the business
climate are welcome. Priority should be given to reducing the regulatory
burden faced by domestic private firms, improving access to land and
financial resources, particularly for SMEs, and reducing corruption.
Establishing an expedited SME-specific insolvency regime would help unlock
capital and prevent unnecessary liquidations. Reducing labor skill
mismatches, increasing human capital and technology access would also boost
labor productivity.

“The team would like to thank the officials of the SBV, MOF, MPI, CEC and
other government agencies, as well as representatives from think tanks, the
private sector and academia for the productive discussions.”

IMF Communications Department

PRESS OFFICER: Keiko Utsunomiya

Phone: +1 202 623-7100Email:


READ ALSO  Managing Director Georgieva’s Remarks at the Conference on Lessons from the Global Financial Crisis in The Age of COVID-19