## PREFACE

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---

### Mission overview and objectives
- A Technical Assistance (TA) scoping mission visited Hanoi, Vietnam, during June 28 – July 5, 2023, following a request by the Ministry of Planning and Investment (MPI) to support the strengthening of macroeconomic analysis and forecasting.
- Mission activities:
  - Reviewed current macroeconomic forecasting and policy analysis systems and the role of MPI.
  - Delivered refresher training and a workshop on macroeconomic framework to MPI staff.
  - Prepared an action plan for the TA project.
- Project centerpiece: develop an Excel-based macroeconomic projection tool (MPT) grounded in Financial Programming and Policies (FPP) framework principles and integrate tool-based results into policy making.

### Mission team and counterparts
- Mission team: Tubagus Feridhanusetyawan (Mission Chief, ICDMF) and David Corvino (CDOT).
- Main counterparts: Financial and Monetary Department (FMD) of MPI and other MPI departments including the National Economic Issues Department (NEID), General Statistics Office (GSO), Central Institute for Economic Management (CIEM), and Vietnam Institute of Development Strategies (VIDS).
- Other engagements: State Bank of Vietnam (SBV), Ministry of Finance (MOF), Ministry of Industry and Trade (MOIT).
- MPI leadership engagement: Meetings with Vice Minister Do Thanh Trung and concluding presentation to Vice Minister Tran Quoc Phuong and senior officials.
- In-country coordination led by Mr. Nguyen The Ngan (Director General FMD) and Ms. Hoang Hong (Deputy Director General FMD).

### Note on findings and report status
- Diagnosis based on information available in July 2023.
- Findings and recommendations represent the views and advice of the IMF mission team and do not necessarily reflect those of the authorities.
- The report was shared with the authorities for input and comment.

---

### Key statistics and macro context
- Real GDP grew by 8.02 percent in 2022 and average inflation was contained at 3.15 percent.
- Growth slowed significantly in the first half of 2023, partly driven by weak exports.
- Growth is expected to slowdown in 2023 before returning to high rates over the medium-term as structural reforms are implemented.
- Exchange rate pressures rose as global interest rates increased sharply; a major domestic bank suffered a deposit run and was placed under SBV’s control; financial stress among real estate developers emerged and the corporate bond market froze.
- Liquidity and inflationary pressures have eased recently.

### Executive summary: purpose, scope, and core deliverables
- Purpose: build capacity in macroeconomic analysis and forecasting in MPI; establish a Core Working Group (CWG) under MPI coordination to carry out macroeconomic analysis; assist the CWG through IMF TA.
- Core deliverable: an Excel-based macroeconomic projection tool (MPT) grounded in FPP principles and integration of tool-based results into policy making.
- Project duration and missions:
  - The 3-year TA project (2023-26) is expected to include 9 in-person missions and virtual meetings between missions.
  - Phase 1 (2023-24): develop and operate the Macro-Framework Foundation Tool (MFT) and the Public Debt Dynamics Tool (DDT).
  - Phase 2 (2025-26, tentative): enhance the MPT and potentially develop a Comprehensive Adaptive Expectation Model (CAEM); authorities and IMF TA team to discuss and reevaluate the plan starting mid-2024.
- Training: FPP training and other capacity-building sessions to be delivered early and during in-person missions.

---

### SECTION I. BACKGROUND

### A. TA request, timeline, and institutional setup
- MPI submitted a TA request on January 30, 2023, to Capacity Development Office in Thailand (CDOT).
- Pre-scoping meeting: May 9, 2023. CDOT/ICD support confirmed May 15, 2023.
- Follow-up meeting: May 18, 2023 — authorities reiterated CWG composition (MPI, SBV, MOF, MOIT), emphasized need for basic trainings, noted language barriers requiring interpretation, and requested in-person training components in each mission.
- Authorities preferred a basic initial tool with modest data requirements, expandable later for debt projection and more complex analysis.

### B. Integration with surveillance priorities
- Priorities: modernizing economic institutions, enhancing financial stability, improving data quality and transparency to support Vietnam’s development transition.
- TA alignment: capacity development in macroeconomic analysis and forecasting to support policy formulation, shock assessment, inter-agency coordination, and IMF engagement.
- TA team coordinated with the IMF country team to align the project with surveillance priorities.

---

### SECTION II. SCOPING MISSION FINDINGS AND ASSESSMENT

### High-level diagnostic findings
- Fragmentation: no fully-fledged multi-sector macroeconomic framework used across institutions; analysis fragmented across different tools and data.
- Data quality and sharing: limited processes to ensure quality and consistency of macroeconomic data and to facilitate data sharing across departments.
- Institutional coordination: formal mechanisms to discuss and align macroeconomic analysis and forecasting across departments are inadequate.
- Capacity heterogeneity: staff capacity is heterogeneous within and across departments; many staff not familiar with the FPP framework.
- Tool design preference: authorities expect a simple, accessible MPT with modest data requirements initially, expanding coverage over time.

### Forecasting practices and data features
- SBV:
  - Monetary Policy Department developed FPAS with ICDMM TA; Phase 1 finalized Quarter Projection Model (semi-structural general equilibrium); Phase 2 integrating model outputs into real-time policy; Phase 3 strengthening external communications.
- MOIT:
  - Produces forecasts for exports/imports, industrial production, domestic consumption with 1-month, 6-month, 1-year, and 2-year horizons using judgment and international forecasts.
- MOF:
  - Budget prepared bottom-up; staff use regression and time-series econometric analysis; debt department uses IMF Debt Sustainability Analysis template.
- GSO:
  - Provides quarterly and annual GDP by activity and expenditure; quarterly GDP estimates published at end of quarter.
  - National Accounts follow 2008 SNA with 2010 base year; plans to use 2020 benchmark and chain-linking volume measures.
- Data publication lags:
  - SBV monthly monetary data published with a time lag around 10 weeks.
  - Monthly BOP data publication lag around 10 weeks.
  - Final government budget accounts production can take up to 18 months with large revisions.

### Data governance and dissemination issues
- Data responsibilities spread across agencies (GSO, SBV, MOIT, MPI, MOF).
- No central government macroeconomic database; within MPI, no common database—each department manages its own data.
- Many economic data remain unpublished; obtaining non-public data requires formal channels and can be lengthy.

---

### INSTITUTIONAL COORDINATION, MPI ROLE, AND POLICY PROCESSES

### MPI remit and policy calendar
- MPI responsibilities include producing 10-year SEDS, 5-year SEDPs, annual SEDP, and monitoring reports; coordinates the “1317” policy working group with MPI, SBV, MOF, MOIT.
- SEDS/SEDP targets (examples from 2021-25 SEDP):
  - average growth rate of GDP in five years expected to increase by 6.5-7 percent per year;
  - GDP per capita by 2025 is to reach about US$4,700–5,000;
  - share of processing and manufacturing industry and digital economy to GDP: over 25 percent and about 20 percent respectively;
  - contribution of total factor productivity (TFP) to growth: about 45 percent;
  - average social labor productivity growth: over 6.5 percent per annum;
  - urbanization rate to reach about 45 percent;
  - state budget deficit during 2021-2025 will account for 3.7 percent of GDP on average.
- Annual SEDP drafting: July-October; submitted to National Assembly and approved in November together with state budget.
- Annual state budget process: MOF leads; starts in June; submitted to National Assembly in October for approval normally in November.

### Roles of key ministries and benefits from CWG participation
- MOF: manages state budget, fiscal policy, state assets; produces annual and longer-term fiscal/ debt strategies.
- SBV: manages monetary and FX operations, financial stability, banking supervision; publishes monthly/quarterly macro indicators.
- MOIT: manages industry and trade statistics and strategies.
- CWG participation by MOF, SBV, MOIT expected to:
  - enhance macro policy coordination;
  - increase exposure to FPP-based macro projection tools;
  - improve data and information sharing processes.

---

### GAPS, TOOLS, AND ACTION PLAN

### Key gaps identified
- No full-fledged multi-sector macroeconomic framework used for analysis and forecasting (CIEM, VIDS, GSO, SBV, MOF, MOIT use different methodologies).
- No MPT to produce comprehensive, consistent baseline forecasts across sectors and to analyze linkages and transmissions.
- No systematic process to ensure quality and consistency of macroeconomic data nor to facilitate data sharing.
- Limited formal mechanisms for inter-departmental macroeconomic discussion and forecasting calendar alignment.
- Heterogeneous staff capacity; many CWG members unfamiliar with FPP framework.

### Principal objectives of TA project (paragraph 28)
1. Improve the depth, structure, and consistency of macroeconomic analysis and projection.
2. Use the MPT to assess effects of macro risks and policy scenarios, including debt analysis and projection.
3. Improve institutional coordination and data sharing between agencies.
4. Develop capacity to provide analytical contributions and integrate MPT-based results in policy making.

### Key axes of implementation (paragraph 29)
- Improve timeliness and quality of macro database.
- Develop a customized Excel-based MPT ensuring accounting and economic consistency across sectors and tailored to Vietnam.
- Build long-term capacity via TA, hands-on training, and IMF training center participation.
- Produce full-scale baseline forecasting scenario; analyze model properties and interpret results.
- Incorporate policy options and macro risks into the tool and draw policy implications.
- Develop user manual and materials to guarantee institutionalization and maintenance.
- Tailor tool outputs to policy discussion needs.
- Consider Phase 2 enhancements depending on Phase 1 progress.

### Tools described
- MFT (Macro-Framework Foundation Tool):
  - Excel-based simplified version of IMF standard FPP framework.
  - Features: essential links and consistency checks across four macroeconomic sectors; largely judgmental forecasts with several behavioral equations integrated; accounted financing sources; modest data/calibration demands; easy-to-use dashboard for policy scenarios.
- DDT (Debt Dynamics Tool):
  - Excel-based tool using projections of key macroeconomic and financial variables to provide public debt projections under baseline and stress test scenarios; includes fan charts describing uncertainty probabilistically.
- CAEM (Comprehensive Adaptive Expectation Model):
  - Excel-based, augmenting FPP accounting with a general-equilibrium backward-looking model with gap-trend dynamics.
  - More resource intensive in data, operation, calibration; uses more behavioral equations; greater sectoral granularity.

### Delivery schedule and phases (paragraph 30 and selected milestones)
- Tentative schedule: May 2023 to April 2026 with 9 in-person missions; continued engagement for about 2-3 years.
- Phase 1.1 – Scoping, Project Action Plan, and Training
  - Mission 1 (Scoping mission): June-July 2023 — assess systems; agree ad-referendum on action plan; presentation/workshop/refresher training; discuss CWG.
- Phase 1.2 – Enhancement of Inputs
  - Mission 2: October 2023 — compile macro database; customize input sheets; one-week FPP training.
- Phase 1.3 – Development of Baseline Scenario
  - Mission 3: February 2024 — develop and test behavioral equations; produce real and fiscal sector forecasts; begin external sector work; ensure that 80 percent of CWG completed FPP/MDS/DDT trainings.
  - Mission 4: June 2024 — produce full-scale baseline scenario; start debt module groundwork.
- Phase 1.4 – Development of Policy and Risk Scenarios
  - Mission 5: October 2024 — produce risks and policy scenarios including debt analysis; assess shocks and debt compliance with fiscal rules.
- Phase 2 – Tool Enhancement and Institutionalization (tentative)
  - Mission 6: February 2025; Mission 7: June 2025; Mission 8: October 2025; Mission 9 (Concluding Mission): March 2026.
  - Mid-2024: authorities and IMF TA team to discuss Phase 2 plans and confirm enhancements.

### Assumptions and tool targets (paragraph 31)
- Assumes CWG will be able to operate MFT and DDT independently by end of Phase 1 (2023-24).
- Phase 2 (2025-26) to incorporate more advanced features and tools depending on Phase 1 outcomes.
- Mid-2024 decision point to reassess Phase 2 plans.

---

### CORE WORKING GROUP (CWG): COMPOSITION, ROLES, MODALITIES

### Formation and membership
- MPI formed CWG in June 2023 with 15 staff from FMD, NEID, CIEM, VIDS, and GSO; selection included senior and junior staff roughly 50:50.
- Total CWG membership expected around 25-30.
- Authorities to formally establish CWG by Ministerial Decision by end-September 2023.
- CWG to report directly to the Director General of FMD; coordinators to be assigned.

### Responsibilities and expected effort
- Lead development and customization of the MPT for Vietnam.
- Operate the MPT to produce macroeconomic analysis and forecasting.
- Develop user guides and manuals.
- Present outputs to policy makers and integrate with policy processes (SEDS, SEDPs, “1317” working group).
- Commit time during IMF missions and in-between missions for implementation and sustainability.

### Communication and coordination
- Existing communication: text messaging platform, mailing list, Zoom.
- CWG to schedule regular meetings, including virtual meetings with IMF team.
- Explore mechanisms to facilitate data sharing; assign and revisit roles and tasks to ensure ownership.
- Early engagement with “1317” policy group encouraged to solicit feedback and institutionalize outputs.

### CWG staff and supervision (as of July 2023)
- CWG staff performing macro analysis and forecasting: 13 named members across MPI departments and affiliated institutes.
- Senior supervisors: Nguyen The Ngan (Director General, MPI, Financial and Monetary Department) — Advisor; Hoang Thi Hong (Deputy DG, MPI, Financial and Monetary Department) — Advisor.
- CWG administrative/coordination support: multiple listed staff.

---

### RISKS, MITIGATIONS, AND INSTITUTIONALIZATION CHALLENGES

### Key risks and mitigating measures (all rated [moderate risk])
- Staff resource constraints and turnovers
  - Risks: senior staff assignment to other tasks; staff moves across ministries; heterogeneity in backgrounds affecting coordination.
  - Mitigations: mixed senior/junior CWG membership to ensure continuity; early development of user manual and documentation; clear roles and responsibilities.
- Insufficient inter-agency coordination and data issues
  - Risks: limited inter-agency interactions; inefficient data sharing; frequent revisions and inconsistencies.
  - Mitigations: formalize CWG by ministerial decision to include MPI, SBV, MOF, MOIT; publish more data and develop online data hubs; leverage “1317” policy group for information sharing; define how to share and coordinate analytical work across institutions.
- Lack of engagement during hybrid missions and trainings
  - Risks: language barriers; challenges participating in online trainings.
  - Mitigations: provide simultaneous interpretation in most meetings; English-speaking CWG members to assist as interpreters; include refresher training sessions in each in-person mission.
- Challenges institutionalizing the MPT
  - Risks: tool may remain confined to small core group and not be integrated into wider policy processes.
  - Mitigations: clearly specify CWG mandate and tasks; early and continued engagement between CWG and “1317” policy group.

### Model and tool notes
- CAEM: Excel-based, augments FPP accounting with a general-equilibrium backward-looking model with gap-trend dynamics; similar to MFT in structure but more data- and calibration-intensive.

---

### RESULTS FRAMEWORK, TARGETS, AND CURRENT ASSESSMENT (as of 07/06/2023)

### Objective
- Develop capacity in macroeconomic forecasting and policy analysis to support policy decision making and communications - MFR.

### Selected outcomes, baseline, targets, and current assessment
- Outcome: Authorities have a baseline understanding of forecasting and analytical capabilities
  - Baseline Value: limited documentation of existing capabilities and coordination.
  - Target Value: Report of existing forecasting and analytical capabilities produced.
  - Current Assessment Value: Fully achieved as of 07/06/2023.
  - Example milestone: Aide Memoire detailing scoping findings — Target Completion Date: 07/06/2023; Milestone Actual Completion Date: 07/06/2023; Milestone Rating: Fully achieved as of 07/06/2023.

- Outcome: Improved analytical skills and better forecasting capacity
  - Target Value: 80 percent of staff in CWG have taken FPP/MDS/DDT training.
  - Current Assessment Value: 20 percent of the CWG staff have taken IMF training (as of 07/06/2023).
  - Milestones: 40 percent of CWG to take FPP/MDS by 10/31/2023; 80 percent by 06/30/2024 — Not achieved as of 07/06/2023.

- Outcome: MPT-based analytical framework used for medium-term forecasts and scenario analysis
  - Baseline Value: No MPT used.
  - Target Value: MPT completed by CWG and used to produce medium-term forecasts and policy analysis.
  - Current Assessment Value: Not achieved as of 07/06/2023.
  - Milestones: CWG to provide data input and run baseline scenario by 11/30/2023 and 06/30/2024 respectively — Not achieved as of 07/06/2023.

- Outcome: Analytical models and forecasting tools developed and operational
  - Baseline Value: No MPT developed.
  - Target Value: MPT developed with all key features.
  - Current Assessment Value: Not achieved as of 07/06/2023.
  - Milestones: CWG customized tool by 10/31/2024; initial draft user manual by 10/31/2024; user manual finalized by 10/31/2025 — Not achieved as of 07/06/2023.

- Outcome: Decision-making process streamlined and roles defined
  - Milestones: Formal appointment of CWG by 9/30/2023; agreement on CWG roles vis-à-vis policy decision group by 12/31/2023 — Not achieved as of 07/06/2023.

- Outcome: Decisionmakers use MPT-based analysis in policy formulation
  - Milestones: CWG produces baseline report by 06/30/2024; presents baseline to policy makers by 10/31/2024; presents risk and debt scenarios to policy makers by 02/28/2025 — Not achieved as of 07/06/2023.

---

*Source: IMF Technical Report – Vietnam Macroeconomic Framework TA: Scoping Mission (information available in July 2023).*

### PREFACE ................................................................................................................

### PREFACE

### Mission overview and objectives
- A Technical Assistance (TA) scoping mission visited Hanoi, Vietnam, during June 28 – July 5, 2023, following a request by the Ministry of Planning and Investment (MPI) to support the strengthening of macroeconomic analysis and forecasting.
- The mission reviewed current macroeconomic forecasting and policy analysis systems and the role of the Ministry of Planning and Investment (MPI) in the process, provided a refresher training and workshop on macroeconomic framework to MPI staff, and prepared an action plan for the TA project.
- The project will be centered around developing an Excel-based macroeconomic projection tool (MPT) based on Financial Programming and Policies (FPP) framework principles and integrating tool-based results in the policy making process.

### Mission team and counterparts
- Mission team: Tubagus Feridhanusetyawan (Mission Chief, ICDMF) and David Corvino (CDOT).
- Main counterparts: Financial and Monetary Department (FMD) of MPI and other MPI departments including the National Economic Issues Department (NEID), General Statistics Office (GSO), Central Institute for Economic Management (CIEM), and Vietnam Institute of Development Strategies (VIDS).
- Other engagements: State Bank of Vietnam (SBV), Ministry of Finance (MOF), Ministry of Industry and Trade (MOIT).
- MPI leadership engagement: Meetings with Vice Minister Do Thanh Trung and concluding presentation to Vice Minister Tran Quoc Phuong and senior officials.
- In-country coordination led by Mr. Nguyen The Ngan (Director General FMD) and Ms. Hoang Hong (Deputy Director General FMD).

### Note on findings and report status
- The diagnosis is based on information available in July 2023.
- Findings and recommendations represent the views and advice of the IMF mission team and do not necessarily reflect those of the authorities.
- The report was shared with the authorities for input and comment.

---

### EXECUTIVE SUMMARY

### Purpose and scope of the TA project
- Purpose: build capacity in macroeconomic analysis and forecasting in MPI, establish a Core Working Group (CWG) under MPI coordination to carry out macroeconomic analysis, and assist the CWG through IMF TA.
- Core deliverable: an Excel-based macroeconomic projection tool (MPT) grounded in FPP principles and integration of tool-based results into policy making.

### Key findings from the scoping mission (June 28–July 5, 2023)
- There is no fully-fledged multi-sector macroeconomic framework used by departments across different ministries.
- Limited processes exist to ensure the quality of macroeconomic data and their consistency across sectors and to facilitate data sharing across departments.
- Formal inter-departmental mechanisms to discuss macroeconomic analysis and forecasting are inadequate.
- Staff capacity is heterogeneous within and across departments, calling for a simple, accessible MPT and early-stage macroeconomic training.

### Action plan overview
- The 3-year TA project (2023-26) is expected to include 9 in-person missions and virtual meetings between missions.
- Phase 1 (2023-24): focus on developing and operating the Macro-Framework Foundation Tool (MFT) and the Public Debt Dynamics Tool (DDT) to produce macroeconomic analysis and debt projections.
- Phase 2 (2025-26, tentative): depending on progress, enhance the MPT and potentially develop a Comprehensive Adaptive Expectation Model (CAEM) to replace the MFT; authorities and IMF TA team to discuss and reevaluate the plan starting mid-2024.
- Training: FPP training and other capacity-building sessions to be delivered early and during in-person missions.

### Role of the Core Working Group (CWG)
- The CWG will lead implementation of activities and targets in the action plan, supported by the IMF TA team.
- Responsibilities: develop and customize the MPT for Vietnam, operate the MPT to produce macroeconomic analysis and forecasting, develop user guides and manuals, and present outputs to policy makers.

---

### SECTION I. BACKGROUND: GENESIS OF THE CD PROJECT

### A. The macroeconomic context of Vietnam
- Real GDP grew by 8.02 percent in 2022 and average inflation was contained at 3.15 percent.
- Exchange rate pressures mounted as global interest rates increased sharply.
- A major domestic bank suffered a deposit run and was placed under SBV’s control; financial stress among real estate developers emerged, and the corporate bond market froze.
- Liquidity and inflationary pressures have eased recently, but economic activities slowed down significantly in the first half of 2023 partly driven by weak exports.
- Growth is expected to slowdown in 2023 before returning to high rates over the medium-term as structural reforms are implemented.

### B. The TA request of the authorities (timeline and objectives)
- On January 30, 2023, the MPI submitted a request to Capacity Development Office in Thailand (CDOT) for IMF technical assistance to strengthen capacity in macroeconomic analysis and forecasting.
- Pre-scoping meeting on May 9, 2023: authorities clarified the request and presented institutional coordination mechanisms; MPI to coordinate an inter-ministerial Core Working Group (CWG).
- May 15, 2023: Director of CDOT confirmed ICD and CDOT would support, coordinated by ICDMF.
- Follow-up meeting on May 18, 2023: authorities reiterated CWG composition (MPI, SBV, MOF, MOIT), emphasized need for basic trainings due to limited familiarity with the Fund’s macroeconomic framework, noted language barriers requiring interpretation, and requested in-person training components in each mission.
- Authorities expressed preference for a basic initial tool with less demanding data requirements, expanding later to include debt projection and more complex analysis.

### C. Integration with surveillance priorities
- Modernizing economic institutions, enhancing financial stability, and improving data quality and transparency are main priorities to support Vietnam’s transition to the next phase of development.
- Capacity development in macroeconomic analysis and forecasting will support formulation and implementation of policies, enable high-quality assessment of shocks and policy changes, facilitate inter-agency coordination, and strengthen engagement with the IMF.
- The TA team coordinated with the IMF country team to align the TA project with surveillance priorities.

---

### SECTION II. SCOPING MISSION FINDINGS AND ASSESSMENT

### A. Introduction and methodology
- The scoping mission (June 28–July 5) assessed current practices in macroeconomic analysis and forecasting, identified areas for improvement, and prepared an action plan in consultation with the authorities.
- The mission used information collected from questionnaires and meetings (see Annex D for meeting schedule) and delivered a 1½-day presentation session to the CWG on basic FPP principles, tools for macroeconomic analysis, and exercises using Vietnam’s 2022 Article IV Staff Report as an example.

### B. High-level diagnostic findings (summary)
- Fragmentation: macroeconomic analysis is fragmented across various institutions using different tools and data.
- Data quality and sharing: limited processes to ensure quality and consistency of macroeconomic data and to facilitate data sharing across departments.
- Institutional coordination: formal mechanisms to discuss and align macroeconomic analysis and forecasting across departments are inadequate.
- Capacity heterogeneity: varying levels of staff familiarity with multi-sector macroeconomic frameworks and the Fund’s FPP approach, necessitating basic trainings and accessible tools.
- Tool design preference: authorities expect the CWG to start with a basic tool with modest data requirements and expand coverage over time, given capacity, coordination, and data constraints.

---

*Source: IMF Technical Report – Vietnam Macroeconomic Framework TA: Scoping Mission (information available in July 2023).*

### 12. The scoping mission assessment focused on the planned key counterparts for the TA

### 12. The scoping mission assessment focused on the planned key counterparts for the TA

### Institutional coordination and the role of MPI
- Key counterparts actively engaged in the ministry’s macroeconomic analysis and policy recommendations include: Financial and Monetary Department (FMD) (TA focal point), Central Institute of Economic Management (CIEM), Vietnam Institute for Development Strategy (VIDS), General Office of Statistics (GSO), and National Economic Issues Department (NEID).
- Mission engagement also included senior management and technical staff of State Bank of Vietnam (SBV), Ministry of Industry and Trade (MOIT), and Ministry of Finance (MOF).
- Authorities were advised that involvement and engagement with all agencies involved in macroeconomic policy and analysis will be important for the success of the project.
- National policy formulation processes:
  - 10-year Socio-Economic Development Strategy (SEDS) and 5-year and 1-year (annual) Socio-Economic Development Plans (SEDPs) guide overall economic and development policies.
  - Annual SEDP formulates policies and targets on an annual basis and informs the annual state budget; other specific economic policies are discussed and decided by the Cabinet during its regular meetings.
- The 10-year SEDS and 5-year SEDP:
  - 10-year SEDS aligns with long-term development visions (2030, 2045) and is the basis for masterplans at national, regional, and 63 provincial levels.
  - 5-year SEDP describes concrete actions and sets economic, social, environmental targets consistent with the 10-year SEDS.
  - Example targets from the 2021-25 SEDP include: average growth rate of Gross Domestic Product (GDP) in five years is expected to increase by 6.5-7 percent per year; GDP per capita by 2025 is to reach about US$4,700–5,000; The share of the processing and manufacturing industry and the digital economy to GDP is to account for over 25 percent and about 20 percent respectively; The contribution of total factor productivity (TFP) to growth is to reach about 45 percent; The average social labor productivity will grow by over 6.5 percent per annum; The urbanization rate is to reach about 45 percent; and state budget deficit during the period of 2021-2025 will account for 3.7 percent of GDP on average.
- The annual SEDP:
  - Defines socio-economic projections and targets for the following year and is important for the annual state budget.
  - Drafting normally takes place during July-October; MPI leads preparation by incorporating inputs from various ministries including the SBV.
  - Annual SEDP is submitted to the National Assembly for discussion and approved in November together with the state budget.
  - Macroeconomic assumptions in the annual SEDP are used for the elaboration of Resolution No. 01, issued by the Prime Minister in January of the following year, presenting key tasks, economic targets, and measures to implement the socio-economic development plan for that year.
- The annual state budget:
  - Formulation is driven by the MOF in coordination with the annual SEDP which specifies macroeconomic assumptions, policy directions, and targets including on fiscal revenue and spending.
  - Starting in June each year, MOF collects spending proposals and revenue estimates; MPI formulates details of capital spending in line with the 5-year SEDP and the 5-year public investment plan.
  - Budget financing considers SEDP expenditure priorities and debt targets, revenue projections, debt repayment schedule, and inputs from relevant agencies.
  - Annual state budget is submitted to the National Assembly in October for discussion and approval normally in November.
- The “1317” policy working group:
  - Comprises MPI, SBV, MOF, and MOIT; coordinated by MPI; meets quarterly and on ad-hoc basis to discuss specific topics (examples: economic impact of Russian/Ukraine tension, Brexit, increase in interest rates by the US Federal Reserve, post-Covid recovery package).
  - Relevant ministries present proposals based on their own analysis; government makes the final decision. Divergences are resolved by agreement among participants.
  - After each meeting, MPI drafts a policy execution report presenting macroeconomic issues and policy recommendations, shared with relevant ministries.
  - Coordination within “1317” has improved over time, facilitating information and data sharing between agencies.
- Role of MPI:
  - Produces the 10-year SEDS, develops masterplans at national, regional, provincial levels, prepares 5-year SEDPs and the annual SEDP, and produces monitoring reports of SEDPs on monthly, quarterly, and annual basis.
  - Serves as focal point in facilitating macroeconomic policy discussion among ministries and coordinates the “1317” policy group.
  - Consults and collects inputs from various departments and ministries on macroeconomic projections and policy proposals; provides advice on macroeconomic policies and management, develops strategies, plans, legal documents for economic development, and formulates domestic and foreign investment policies.
- MPI’s mandate includes official statistics via GSO and other fields: public procurement and investment, special economic zones, management of official development assistance and foreign non-governmental aids, establishment and development of small and medium enterprises, and the collective economy and cooperative sector.

### The remit and outputs of the TA beneficiary departments
- Under Decree No 89/2022/ND-CP dated on October 28, 2022, there are 28 departments, agencies, and institutes under the MPI; most macroeconomic policy and analysis work is performed by FMD, NEID, GSO, CIEM, and VIDS.
- FMD (TA focal point):
  - Assists the Minister in state management and planning functions in fiscal, monetary, and banking sectors.
  - Acts as MPI’s focal point for formulation and coordination of macroeconomic policies with other ministries by gathering inputs on data and policy proposals related to fiscal, monetary, and banking sectors.
  - Assists the Minister in coordinating the “1317” policy working group, including preparing issues for discussion, setting meeting agenda, and producing “1317” reports.
- NEID:
  - Coordinates in assisting the Minister to perform state management functions in synthesizing socio-economic development plans and public investment plans.
  - Produces 5-year and annual SEDPs and monitors implementation of SEDP on monthly, quarterly, annually, and 5-year basis.
  - In charge of reporting implementation of the 5-year and annual public investment plans and collects information from various departments within MPI and other ministries.
- GSO:
  - Responsible for compiling and publishing a wide range of statistics; advises the Minister on statistics; conducts statistical activities and provides social and economic information to government and public.
  - Database includes national accounts and aggregate data on agriculture, industry, trade, investment, labor, price, environment, population and housing, enterprise survey data and other national statistical survey program.
  - Produces annual publications (Statistical Yearbook, labor force survey, gender statistics report).
  - Performs near-term estimation of quarterly GDP and is charged with producing GDP growth forecasting scenarios up to one year horizon.
  - Quarterly GDP estimation method: based on data of the first 2 months and the first 20 days of the last month of the quarter, extracted from survey data, statistical reporting mechanism, and administrative records; GSO produces estimate for the remaining 10 days of the last month of the quarter.
- CIEM:
  - Research department providing assessments on macroeconomic developments and policies; studies economic management and business development mechanisms and policies; provides information and forecast of socio-economic situation; trains PhDs in economics.
  - Recent reorganization absorbed part of the National Center for Socio-Economic Information and Forecast (NCIF) which is now dissolved.
  - Recent publications include a review of the tax system for alcohol beverage, a report on streamlining business conditions, and a mid-term evaluation report on economic structures.
- VIDS:
  - Research department responsible for developing long-term national development strategies and public investment plans.
  - Develops Vietnam’s 10-year SEDS by coordinating with line ministries, National Assembly committees, independent research agencies, and local Communist Party authorities.
  - In charge of developing national and regional masterplans and public investment plans consistent with the SEDS; absorbed part of the dissolved NCIF and provides PhD trainings.
- Figure 1 referenced: Ministry of Planning and Investment Organigram (source: Ministry of Planning and Investment) — organigram noted but not reproduced here.

### Roles of MOF, SBV, and MOIT and benefits from CWG participation
- MOF:
  - Manages state budget, fiscal policy, state assets, national financial reserves, and finances of state corporations.
  - Leads elaboration of annual state budget plan, annual borrowing and repayment plan, bi-annual public debt bulletin, 5-year financial, public debt, and borrowing and repayment plans, and 3-year financial and debt strategy.
  - Produces longer-term strategies including the 10-year public debt strategy, the 10-year financial strategy, and the 10-year tax system reform strategy.
- SBV:
  - Ministry-level body performing state management functions of monetary and foreign exchange operations, financial stability, and banking supervision.
  - Main outputs: monthly, quarterly, and annual publication of macroeconomic indicators (inflation expectation surveys, balance of payments, credit to the private sector); monthly monetary survey and other monetary indicators published in the International Financial Statistics.
- MOIT:
  - Responsible for management, regulation, governance and promotion of the industry and trade sectors.
  - Publishes monthly, quarterly and annual reports on trade and industrial developments; the 5-year economic restructuring plan; the 10-year energy strategy; the 10-year national program on trade and industry; and the 10-year export and import strategy.
- Potential benefits of MOF, SBV, MOIT participating in the CWG:
  - (i) Enhance macroeconomic policy coordination between ministries;
  - (ii) Increase exposure to macroeconomic projection tools and strengthen expertise on macroeconomic analysis using FPP-based framework;
  - (iii) Improve data and information sharing processes between ministries.

### Existing macroeconomic analysis and human resources
- Current situation:
  - Tools for macroeconomic analysis are fragmented across departments; human resources are heterogeneous.
  - Economic targets from SEDPs are often used as projections by government agencies.
  - Structural macroeconomic and time series econometrics analysis are commonly used; no full-fledged multi-sector macroeconomic framework is used in those departments, with the exception that Monetary Policy Department of the SBV uses a semi-structural general equilibrium model for policy scenario analysis and forecasts.
  - Some departments rely on individual researchers using their own methodology and data.
  - Limited formal mechanism to share and coordinate macroeconomic analysis across different ministries or within one ministry.
- Staff capacity and familiarity:
  - Research staff generally have strong analytical backgrounds with graduate degrees in Economics, but many are not familiar with the FPP-based macroeconomic framework.
  - Due to past IMF training, MOF and SBV staff are more familiar with IMF work and trainings; a few MPI and MOIT staff have taken IMF trainings in the past.
- Departments within MPI (methodologies, staffing):
  - FMD and NEID:
    - Produce economic reports, policy papers, and SEDPs by collecting inputs from various departments within MPI and other ministries.
    - Policy makers in MPI departments use research performed by CIEM or VIDS and do not perform economic research themselves.
    - Number of staff in each department is less than 20, mostly holding post-graduate degrees.
  - CIEM:
    - Uses a structural econometric model to conduct short- and long-term forecasts.
    - Department of Economic Analysis and Forecasting core staff were transferred from NCIF.
    - Currently no other specific model or analytical tool used; methodology varies by researcher.
    - Employs around 20 administrative and 80 research staff, of which around 15 holding PhD and 35 Master’s degrees.
  - VIDS:
    - Uses time-series econometric models; methodology and tools depend on individual researchers with no centralized approach.
    - Contracts independent academics from universities or think tanks.
    - Employs 160 staff across 11 divisions, including 1 associate professor, 16 holding PhD and 95 Master’s degrees.
  - GSO:
    - Produces early GDP estimates and growth forecast scenarios (baseline based on government’s annual target and upside/downside risks scenarios).
    - Forecasts elaborated with help from other agencies and provincial authorities using economic activity trends and experts’ views rather than models or econometrics.
    - Organizational structure includes central office and provincial statistics offices with total number of employees of more than 5100 people including 600 in the central statistics office.
    - About two-third of the GSO staff have graduate and post-graduate degrees.

*Source: IMF | Technical Report – Vietnam Macroeconomic Framework TA: Scoping Mission*

### 20. The SBV undertakes its own analysis on monetary policies, FX management, banking

### 20. The SBV undertakes its own analysis on monetary policies, FX management, banking

### SBV analytical work and FPAS development
- The Monetary Policy Department has been working on developing the Forecasting and Policy Analysis Systems (FPAS) analytical tool supported by ICDMM TA.
- The FPAS TA has different phases:
  - 1) The finalized Phase 1 on developing the models and training of staff to operate the Quarterly Projection Model, a semi-structural general equilibrium tool;
  - 2) The ongoing Phase 2 on integrating model-based results into SBV’s real-time policy processes; and
  - 3) The future Phase 3 on strengthening external communications.
- Other SBV departments use different tools for macroeconomic analysis, including structural macroeconomic models and econometrics-based tools.
- The Quarterly Projection Model details are referenced in the source document.

### Forecasting practices across ministries
- MOIT responsibilities and practices:
  - Manages, regulates, governs, and promotes the industry, energy, and trade sectors.
  - Produces forecasts for exports and imports growth, industrial production, and domestic consumption with 1-month, 6-month, 1-year, and 2-year horizons.
  - Forecasting is performed by using judgement based on recent economic developments and international forecasts (including the IMF World Economic Outlook).
  - MOIT has developed a common database, shared by several departments within the ministry.
- MOF responsibilities and practices:
  - Focuses analysis on taxes, current spending, administered prices, and policies on nonbank financial institutions.
  - Annual budget elaborated on a bottom-up approach using local governments revenue and expenditure projections, ensuring consistency with fiscal targets from national plans (5-year SEDP, 3-year rolling financial plans).
  - MOF staff mostly use regression and time-series econometric analysis; the debt department uses the IMF Debt Sustainability Analysis template.

### Data availability, quality, and publication lags
- National accounts:
  - GSO provides quarterly and annual data on GDP by type of economic activity and by expenditure, both in current and constant prices, quarterly data on labor market, and monthly and annual data on external trade, industrial output, retail sales, and prices.
  - National Accounts follow the 2008 SNA methodology with a 2010 base year.
  - An estimate of quarterly GDP growth is published at the end of the corresponding quarter.
  - GDP data are available from 1986 in annual frequency, and from 2010Q1 in quarterly frequency.
  - Vietnam plans to use 2020 as the new benchmark year and employ chain-linking volume measures.
- Prices statistics:
  - CPI methodology broadly in line with international standards.
  - Monthly CPIs are released on timely basis by the end of the reference month.
  - The current weight reference period is 2019.
  - Monthly producer and trade price indices are published quarterly.
- Government finance statistics:
  - Government operations data reflect consolidated operations of the state budget covering central, provincial, district, and commune levels.
  - Fiscal data follow the 2014 Government Financial Statistics Manual but are only available at the aggregated level with insufficient details to inform government consumption and investment in the national accounts.
  - Fiscal data exclude quasi fiscal activities of the central bank, state-owned enterprises, and extra-budgetary funds such as the Social Security Fund and Sinking Fund.
  - Compilation is on a cash basis for final annual data but varies for provisional data depending on their source.
  - The process of producing final budget accounts takes up to 18 months, with typically large revisions between initial and final accounts, complicating policy making and timely assessments.
- Monetary and financial statistics:
  - SBV reports key monetary data for the central bank, monetary survey, and other depository corporations on monthly basis using the 2000 Monetary and Financial Statistics Manual.
  - The time lag in publishing the monthly data is around 10 weeks.
  - Vietnam reports 10 of the 12 core financial soundness indicators (FSIs), 7 of the 13 additional FSIs for deposit takers, and one FSI for real estate markets on a semi-annual basis.
- External sector statistics:
  - Vietnam reports balance of payments (BOP) data in BPM6 format from 2013 onwards.
  - The time lag in the publication of monthly BOP data is around 10 weeks.
  - Weaknesses persist in compilation of external sector position statistics (e.g., large BOP errors and omissions) and external debt statistics.
  - There are no data on international investment position (IIP) at present.
  - The annual foreign direct investment survey was last undertaken for 2015 reference year and has been discontinued thereafter.

### Data governance and dissemination issues
- Data collection responsibilities are spread across agencies:
  - GSO: national accounts, prices, manufacturing production index, labor, population, housing, private investment, and other survey data.
  - SBV: monetary, balance of payments, private external debt, and financial sector data.
  - MOIT: industry and trade data.
  - MPI: public investment, FDI investment, business registration, and public-private-partnership data.
  - MOF: fiscal, public debt, state owned enterprises, bonds and securities, insurance, and public asset data.
- There is no central database of macroeconomic data within the government.
- Many economic data remain unpublished; requests for non-public data must follow formal channels which can be lengthy due to lack of coordination.
- Within MPI, there is no common database and each department manages its data separately.

### Needs assessment: key gaps identified (from paragraph 26)
- Lack of a full-fledged multi-sector macroeconomic framework used for analysis and forecasting:
  - CIEM, VIDS, GSO, and departments in SBV, MOF, and MOIT have different methodologies.
  - No MPT to (1) produce a comprehensive and consistent set of baseline forecasts across sectors, and (2) analyze linkages and transmissions to assess impact of policy and risk scenarios.
  - Multiple tools/methodologies risk inefficiencies in forecasting and policy discussion.
- No systematic process to ensure quality and consistency of macroeconomic data and to facilitate data sharing:
  - Each department maintains its own database; no systematic process to share data inputs across ministries or within a ministry.
  - A shared tool for consistency checks and maintenance of key macroeconomic data is needed.
- Limited formal mechanisms for inter-departmental discussion of macroeconomic analysis and forecasting:
  - Developing an MPT usable across departments would facilitate discussion and cooperation.
  - Ensuring CWG membership from MPI, MOF, MOIT, SBV is critical.
  - Formalizing coordination between the CWG, policy making process, and forecasting calendar (annual SEDP, annual state budget, “1317” working group) is recommended.
- Heterogeneous staff capacity:
  - Many CWG members are not familiar with FPP-based macroeconomic framework.
  - Need for a simple, accessible MPT initially, with expansion to more complex analysis as capacity improves.
  - Early-stage macroeconomic training such as FPP or Macroeconomic Diagnostics (MDS) should complement MPT development.

### Proposed action plan: objectives, axes, schedule, and tools
- Principal objectives of the TA project (paragraph 28):
  1) Improve the depth, structure, and consistency of the macroeconomic analysis and projection;
  2) Use the MPT to assess the effects of macroeconomic risks and policy scenarios on the economy, including the debt analysis and projection;
  3) Improve institutional coordination and data sharing between agencies;
  4) Develop capacity to provide analytical contribution and integrate the MPT-based results in the policy making process.
- Key axes of implementation (paragraph 29):
  - Improving timeliness and quality of macroeconomic database.
  - Developing a customized Excel-based MPT that ensures accounting and economic consistency across sectors and tailored to Vietnam’s requirements.
  - Building long-term capacity principally through TA and hands-on training, and participation in IMF training center courses.
  - Producing a full-scale baseline forecasting scenario and supporting CWG to analyze model properties and interpret results.
  - Identifying main policy options and macroeconomic risks, incorporating them into the tool, and drawing policy implications.
  - Developing a user manual and associated material to guarantee institutionalization and maintenance.
  - Using the tools to enhance forecasting and policy-making processes by tailoring outputs to policy discussion needs.
  - Depending on progress during Phase 1 (2023-24), enhancing the MPT during Phase 2 (2025-26) to incorporate more features and advanced tools.
- Delivery schedule and duration (paragraph 30):
  - Tentative schedule runs from May 2023 to April 2026 with 9 in-person missions.
  - Continued engagement for about 2-3 years will be necessary.
  - The logical framework (Log Frame – Annex B) identifies outcomes, indicators, and milestones with targeted dates.
- Assumptions and tool targets (paragraph 31):
  - Assumes CWG would be able to operate the Macro-Framework Foundation Tool (MFT) and the Public Debt Dynamics Tool (DDT) independently by the end of Phase 1 (2023-24).
  - Phase 2 (2025-26) will enhance analytical and forecasting capacity by incorporating features of more advanced tools.
  - Mid-2024 discussions will confirm Phase 2 enhancement plans taking into account outcomes and authorities’ needs.
- Tool descriptions (footnote paragraph 31):
  - MFT: an Excel-based, simplified version of the IMF’s standard FPP framework; features include essential links and consistency checks across four macroeconomic sectors, largely judgmental forecasts with several behavioral equations integrated, accounted financing sources, modest data/calibration demands, and an easy-to-use dashboard for policy scenarios.
  - DDT: an Excel-based tool using projections of key macroeconomic and financial variables to provide public debt projections under baseline and stress test scenarios, including fan charts describing uncertainty probabilistically.

### Core Working Group (CWG): composition, roles, and modalities
- Formation and expansion:
  - MPI established the CWG and will expand it to include staff from MOF, MOIT, and SBV.
  - In June 2023 MPI formed the CWG with 15 staff from various MPI departments including FMD, NEID, CIEM, VIDS, and GSO.
  - Selection included senior staff and junior staff; proportion of senior/junior staff is roughly 50:50.
  - Total CWG membership is expected around 25-30.
  - The authorities will formally establish the CWG with roles, responsibilities, and tasks by issuing a Ministerial Decision by MPI; the process will be completed by end-September 2023.
  - CWG coordinators will be assigned; the CWG will report directly to the Director General of FMD.
- Responsibilities and expected effort:
  - CWG to take the lead in developing the tool; IMF TA team to provide technical support and training.
  - CWG must commit time and effort both during IMF missions and in between missions for implementation and sustainability.
  - CWG to develop a user manual and associated materials.
- Communication and coordination practices:
  - CWG currently uses a text messaging platform, mailing list, and online platforms such as Zoom.
  - CWG will develop a schedule for regular meetings, including virtual meetings between missions with the IMF team, and will explore mechanisms to facilitate data sharing.
  - Roles and tasks for each CWG member will be discussed, assigned, and revisited to ensure coordination and ownership.
- Integration into policy processes:
  - CWG will provide analytical support to MPI-coordinated macroeconomic policy discussions (e.g., SEDS, SEDPs, “1317” working group).
  - Interim period: existing macroeconomic policy formulation processes continue until CWG produces its analysis.
  - CWG will provide regular updates to the “1317” policy working group and present MPT-based analysis at key development stages.
  - Early engagement with the “1317” policy group by showcasing partial results and soliciting feedback is encouraged.
  - Once fully operational, CWG will engage with wider stakeholders.

*IMF | Technical Report – Vietnam Macroeconomic Framework TA: Scoping Mission*

### 36. The authorities intend to start using a simple tool with less demanding data requirements

### 36. The authorities intend to start using a simple tool with less demanding data requirements

### Implementation approach and rationale
- The authorities will start with a simple tool with less demanding data requirements and, once the essential features become operational, plan to expand it at a later stage.
- A step-by-step approach is intended to help the newly established CWG to develop coordinating mechanisms and data-sharing across agencies, and to reap synergies with analytical tools used by various agencies at present.
- The mission and the authorities agreed to start with the MFT that will be extended to include the DDT during Phase 1 (2023-24) of the TA project.
- This phased approach is expected to:
  - meet the macroeconomic forecasting needs at present;
  - match the absorptive capacity of the newly established CWG; and
  - fit the availability of data.

### Phases, timing, and decision points
- Phase 1: 2023-24 — Implement MFT and extend it to include the DDT.
- Phase 2: 2025-26 — Enhance the tool by enriching features and using better-founded behavioral equations; consider replacing the MFT with a framework based on the Comprehensive Adaptive Expectation Model (CAEM).
- Mid-2024 — Authorities and the IMF TA team will discuss and reevaluate whether the envisaged plan for Phase 2 remains appropriate.
- The timing of tool enhancement will also depend on:
  - the progress of the TA project;
  - the effective engagement of the CWG members; and
  - the CWG members’ absorptive capacity.
- The authorities indicated that, depending on progress in the coming months, they may consider expediting part of the work in Phase 1.3 to Phase 1.2 and that in Phase 1.4 to Phase 1.3.
- Table 1 of Annex A shows the delivery schedule.

### Intended analytical capabilities and transition path
- The tools would support the authorities’ intention to build capacity in conducting macroeconomic analysis using FPP-based framework and making debt projections under limited capacity and data availability at present.
- The CAEM is described as:
  - having many similarities with the MFT;
  - incorporating more behavioral equations in building forecasts of macroeconomic variables;
  - having greater granularity in the external, fiscal, and monetary sectors; and
  - providing more options in analyzing policy or shock scenarios.
- Additional considerations for Phase 2:
  - Incorporating nowcasting methodologies; or
  - Linking the tools to a separate quarterly forecasting framework.

### Customization required for the Vietnamese context
- The tools will be customized in the following ways:
  - (i) input sheets will adjusted to better incorporate Vietnam data, to perform consistency checks, and to incorporate the inputs derived from separate satellite modules;
  - (ii) the behavioral equations and parameters for forecasting would be tailored to the Vietnamese context;
  - (iii) the selected indicators and sectoral tables would be adjusted to fit the authorities’ needs;
  - (iv) the DDT will be interfaced into the tools to provide assessment of the impact of shocks on debt projection; and
  - (v) the output tables and graphs will be adjusted to meet the authorities’ reporting requirements.

*1vnmea2023004 - 36. The authorities intend to start using a simple tool with less demanding data requirements*

### 39. This TA project is subject to several risks, but these can be mitigated:

### 1vnmea2023004 - 39. This TA project is subject to several risks, but these can be mitigated:

### Key risks and mitigating measures
- Staff resource constraints and turnovers [moderate risk]
  - Risk details:
    - CWG members, particularly the more senior members, could be assigned to work on various tasks and projects at the same time and they may also move to different ministries.
    - Large heterogeneity in the background and capacity of the CWG members may affect internal coordination.
  - Mitigating factors:
    - The authorities assigned the CWG members from both senior and junior staff to ensure the continuity of work and knowledge transfers from the senior to junior staff.
    - Development of user manual and documentation of the tool will start from early stage of the project to help bring new members up to speed.
    - Establishing clear roles and responsibilities of the CWG members would foster internal coordination and strengthen the implementation of the TA action plan.

- Insufficient inter-agency coordination and data issues [moderate risk]
  - Risk details:
    - Macroeconomic analysis and data management are performed by several agencies with limited inter-agency interactions.
    - Inefficient processes to share information, frequent data revisions, and data inconsistencies among various institutions could hamper analytical work and delays in achieving the project’s objectives.
  - Mitigating factors:
    - Formalizing the CWG by a ministerial decision to include staff of various ministries (MPI, SBV, MOF, MOIT) who will help strengthen inter-agency coordination and improve data quality.
    - Publishing more data and developing online data hubs with access to data by all stakeholders would also facilitate data sharing across agencies.
    - The “1317” policy group has helped improve information sharing processes between agencies since its creation, and this project will piggy-back on the processes already put in place.
    - Formulating a view on how to share and coordinate the analytical work across different institutions that participate in the CWG would also help strengthen inter-agency coordination.

- Lack of engagement during hybrid missions and trainings [moderate risk]
  - Risk details:
    - Language barriers and the need for interpretation during most meetings could hamper the delivery of virtual or hybrid missions.
    - Participation in online trainings would also be challenging.
  - Mitigating factors:
    - Simultaneous interpretation will be provided in most meetings.
    - English-speaking members of the CWG could help serve as interpreters, particularly during technical meetings in between missions.
    - Each in-person mission would include some sessions for a training refresher or workshops to complement possible lack of engagement during virtual trainings.

- Challenges in institutionalizing the MPT [moderate risk]
  - Risk details:
    - Similar TA projects are often successful in building MPT with a small core group but face the challenge when trying to institutionalize the tool into a wide policy making process.
  - Mitigating factors:
    - The mandate and tasks of the CWG would be clearly specified, particularly on its role and functions in the policy making process.
    - Early and continued engagement between the CWG and “1317” policy group would help institutionalize the MPT.

### Model and tool notes
- The CAEM is an Excel-based tool that augments the standard FPP-based macroeconomic accounting framework by incorporating a general-equilibrium backward-looking macroeconomic model with gap-trend dynamics.
- Comparisons and characteristics:
  - The CAEM has several similarities with the MFT, including the use of Excel-based template to generate forecasts and analyze policies/shocks based on 4-sector macroeconomic framework and the easy integration with the DDT.
  - The CAEM is more resource intensive in terms of data, operation, and calibration, and uses more behavioral equations to describe the transition of macroeconomic variable toward its long-term equilibrium.

### Project delivery schedule — selected milestones and timing
- Phase 1.1 – Scoping, Project Action Plan, and Training
  - Mission 1 (Scoping mission): June-July 2023
    - Assessing the current policy analysis and forecasting systems.
    - Reaching agreement ad-referendum on TA action plan.
    - Presentation, workshop, refresher training on macroeconomic framework.
    - Discussing the Core Working Group (CWG): status, role, and coordination.
  - In-between mission work:
    - Completing institutional set-up of CWG, collecting and compiling local data, CWG taking in-person or online FPP/MDS training.

- Phase 1.2 – Enhancement of Inputs
  - Mission 2: October 2023
    - Compiling macroeconomic database and customization of input sheets for tool.
    - Conducting one-week training on FPP using simplified modules.
  - In-between mission work:
    - Continue trainings and customizing input data and sector output tables.

- Phase 1.3 – Development of Baseline Scenario
  - Mission 3: February 2024
    - Finalizing sector specific discussions; developing and testing behavioral equations, including calibration.
    - Producing forecasts of real sector and fiscal sector variables; begin working on the external sector.
    - Ensuring that 80 percent the CWG members completed FPP/MDS/DDT trainings.
  - Mission 4: June 2024
    - Producing a full-scale baseline scenario; starting groundwork for incorporating a debt module based on the DDT.

- Phase 1.4 – Development of Policy and Risk Scenarios
  - Mission 5: October 2024
    - Producing risks and policy scenarios including the debt analysis by incorporating the debt module in the tool.
    - Assessing the impact of shocks and policy changes and analyzing debt projection to assess its compliance with fiscal rules.

- Phase 2 – Tool Enhancement and Institutionalization (tentative)
  - Mission 6: February 2025
  - Mission 7: June 2025
  - Mission 8: October 2025
  - Mission 9 (Concluding Mission): March 2026
  - Note: The tentative plan is to enhance the tools by developing Comprehensive Adaptive Expectation Model (CAEM) during Phase 2 (2015-26). This will be discussed and confirmed with the authorities in the second half of 2024, and the delivery schedule will be updated accordingly.

### Results framework — outcomes, targets, and current assessment (as of 07/06/2023)
- Objective:
  - Develop capacity in macroeconomic forecasting and policy analysis to support policy decision making and communications - MFR
- Outcome: Authorities have a baseline understanding of their existing forecasting and analytical capabilities and opportunities for improvement
  - Annual Assessment Narrative: The scoping mission is taking place on June 28-July 5, 2023 to assess the authorities’ needs and develop TA action plan that will meet their needs and objectives.
  - Outcome Rating Date: 07/06/2023
  - Diagnostic/scoping produced an overview of existing (baseline) capacities and opportunities for improvement supported by an action plan and agreed upon key outcomes and deliverables
    - Baseline Value: There is a limited documentation of the authorities’ existing capabilities and the coordination among relevant agencies
    - Target Value: Report of existing forecasting and analytical capabilities has been produced.
    - Current Assessment Value: Fully achieved as of 07/06/2023
  - Milestones (examples):
    - Aide Memoire detailing findings from the scoping mission is produced — Target Completion Date: 07/06/2023; Milestone Actual Completion Date: 07/06/2023; Milestone Rating: Fully achieved as of 07/06/2023
    - Detailed action plan is agreed by the authorities — Target Completion Date: 07/06/2023; Milestone Actual Completion Date: 07/06/2023; Milestone Rating: Fully achieved as of 07/06/2023

- Outcome: Improved analytical skills, and better macroeconomic forecasting and policy analysis capacity
  - Annual Assessment Narrative: Project has not started - Scoping Mission in progress
  - Outcome Rating Date: 07/06/2023
  - Relevant staff have successfully completed agreed training delivered via various modalities (online, classroom courses, workshops)
    - Baseline Value: No baseline
    - Target Value: 80 percent of staff in Core Working Group (CWG) have taken FPP/MDS/ DDT training.
    - Current Assessment Value: 20 percent of the CWG staff have taken IMF training (as of 07/06/2023)
  - Milestones (examples):
    - 40 percent of CWG members have taken either in-person or online FPP/MDS course — Target Completion Date: 10/31/2023; Not achieved as of 07/06/2023
    - 80 percent of CWG members have taken either in-person or online FPP/MDS/DDT course — Target Completion Date: 06/30/2024; Not achieved as of 07/06/2023

- Outcome: Analytical framework centered around the MPT is used to produce medium-term forecasts, scenarios as well as risk and policy analysis
  - Baseline Value: No MPT is used to produce forecasts and policy analysis
  - Target Value: MPT is completed by the CWG and used to produce medium-term forecasts and policy analysis
  - Current Assessment Value: Not achieved as of 07/06/2023
  - Milestones (examples):
    - CWG successfully provides data input for the MPT, conducts consistency checks, and identifies data issues — Target Completion Date: 11/30/2023; Not achieved as of 07/06/2023
    - CWG successfully runs the baseline scenario for projection and interprets the results — Target Completion Date: 06/30/2024; Not achieved as of 07/06/2023

- Outcome: Analytical models and forecasting tools are developed and operational
  - Annual Assessment Rating: 1 Not Achieve
  - Annual Assessment Narrative: Project has not started - Scoping Mission in progress
  - Outcome Indicator: Macroeconomic Projection Tool (MPT) is developed in the form of an Excel-based macroeconomic framework for forecasting and policy analysis, respecting accounting relationships
    - Baseline Value: No MPT is developed
    - Target Value: The MPT is developed with all key features
    - Current Assessment Value: Not achieved as of 07/06/2023
  - Milestones (examples):
    - The CWG has fully customized the tool for the Vietnamese economy to run the baseline, policy, and debt scenarios — Target Completion Date: 10/31/2024; Not achieved as of 07/06/2023
    - Initial draft of user manual is developed — Target Completion Date: 10/31/2024; Not achieved as of 07/06/2023
    - User manual is finalized — Target Completion Date: 10/31/2025; Not achieved as of 07/06/2023

- Outcome: Decision-making process is well-structured, streamlined, and documented, and associated roles and responsibilities are well-defined
  - Annual Assessment Narrative: Project has not started - Scoping Mission in progress
  - Milestones (examples):
    - Formal appointment of the CWG with its members, roles, responsibilities, and tasks — Target Completion Date: 9/30/2023; Not achieved as of 07/06/2023
    - Agreement on roles, responsibilities, and output between the CWG and policy decision group in relation to the analytical tool — Target Completion Date: 12/31/2023; Not achieved as of 07/06/2023

- Outcome: Decisionmakers understand the structure and function of the Macroeconomic Projection Tool (MPT), and use staff’s MPT-based analysis and forecast in the policy formulation process
  - Annual Assessment Narrative: Project has not started - Scoping Mission in progress
  - Milestones (examples):
    - CWG produces report/presentation on the baseline scenario — Target Completion Date: 06/30/2024; Not achieved as of 07/06/2023
    - CWG makes presentation on the baseline scenario results to policy makers — Target Completion Date: 10/31/2024; Not achieved as of 07/06/2023
    - CWG makes presentation on the risk and policy scenarios including debt projection to policy makers — Target Completion Date: 02/28/2025; Not achieved as of 07/06/2023

### Institutional arrangements — Core Working Group (CWG) as of July 2023
- CWG staff who perform macroeconomic analysis and forecasting: 13 listed members across MPI departments and affiliated research institutes (examples: Le Hoang Lan; Le Thanh Nga; Nguyen Thi Minh Thoa; Vu Duc Viet; Le Thuy Duong; Nguyen Thi Ngan; Pham Phu Minh; Hoang Thi Minh Ha; Le Mai Anh; Do Thu Trang; Dao Xuan Tung Anh; Nguyen Thanh Tung; Nguyen Hai Dang).
- Senior officials providing supervision to the CWG: Nguyen The Ngan (Director General, MPI, Financial and Monetary Department) — Advisor; Hoang Thi Hong (Deputy DG, MPI, Financial and Monetary Department) — Advisor.
- CWG staff who provide coordination/administrative support: Le Thanh Nga; Nguyen Thi Minh Thoa; Do Thu Trang; Nguyen Thi Ngan; Hoang Thi Minh Ha.
- Table title: Table 1. Vietnam: List of the Core Working Group (CWG) on Macroeconomic Analysis and Forecasting — As of July 2023

### Scoping mission agenda (June 28–July 5, 2023) — selected meetings and themes
- Wed, Jun 28
  - Meeting with MPI Senior Officials on strategic considerations of the TA project (8:30-10:30)
  - Meeting with the Core Working Group (CWG) (10:30-11:30)
  - Meeting with representatives from MPI departments working on macroeconomic analysis: FMD, NEID, CIEM, GSO, VIDS (14:00-16:00)
- Thu, Jun 29
  - IMF Presentation on Macroeconomic Framework (8:30-10:00; 14:00-15:30)
  - Meeting with Vice Minister Do Than Trung and MPI Senior Officials (10:00-11:00)
  - Workshop on Macroeconomic Framework (15:45-17:00)
- Fri, Jun 30
  - IMF Presentation on Macroeconomic Framework Tools (8:30-10:30)
  - Meeting CWG on TA project design and considerations (10:30-11:30)
  - Lunch meeting with MPI senior officials (12:00-14:00)
  - Meetings with IMF Resident Representative, State Bank of Vietnam (SBV), Ministry of Industry and Trade (MOIT) (14:00-17:30)
- Mon, Jul 3 to Wed, Jul 5
  - Follow-up meetings with MPI Senior Officials, CWG, MOF, and closing session with MPI Senior Officials and the MPI's CWG.

*IMF | Technical Report – Vietnam Macroeconomic Framework TA: Scoping Mission*

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_Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1vnmea2023004.pdf_