{
  "title": "Public Information Notice: IMF Executive Board Concludes 2012 Article IV Consultation with Vietnam",
  "publication": "IMF News, July 6, 2012",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn1271",
  "canonical": "https://www.imf.org/en/news/articles/2015/09/28/04/53/pn1271",
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  "summary": "Each Public Information Notice contains a background section, a table of selected economic indicators, and an Executive Board assessment.",
  "publishDate": "2012-07-06",
  "sections": [
    {
      "heading": "Background and recent macroeconomic developments",
      "content": "- Stabilization measures and stronger SBV credibility contributed to an improving macroeconomic picture in early 2012.\n- GDP growth and inflation:\n  - GDP growth for 2011 decelerated to below 6 percent and was 4 percent year-on-year (y/y) in Q1 2012.\n  - GDP projection for 2012: 6 percent.\n  - Inflation developments: peaked at 23 percent in August 2011; declined to 10.5 percent in April 2012; projected to decline to about 10¾ percent for 2012 (8¼ percent y/y at year-end).\n- Credit, reserves, and exchange rate:\n  - Credit growth slowed to 14.3 percent y/y in 2011.\n  - The current account moved to a small surplus of 0.2 percent of GDP in 2011 from a deficit of over 4 percent in 2010.\n  - Confidence in the Vietnam dong improved; informal interbank rate moved back within the official trading band.\n  - The SBV was able to increase international reserves significantly in the first three months of 2012, though they remained low.\n- Policy response:\n  - Authorities adopted a stabilization package in February 2011: raised policy interest rates, imposed a credit growth ceiling, and contained investment by government and state-owned enterprises.\n  - With the sharper-than-expected slowdown and rapid fall in inflation in early 2012, the SBV reduced policy interest rates three times over three months since March 2012.\n  - Government began encouraging more bank credit to strategic sectors (agriculture, SMEs, etc).\n  - Authorities addressed vulnerabilities at small weak banks: nine banks classified as weak were placed under special inspection and required to present restructuring and recapitalization plans.\n  - A comprehensive medium-term strategy to strengthen the financial sector was adopted."
    },
    {
      "heading": "Executive Board assessment — findings and policy recommendations",
      "content": "- Commendations and overarching message:\n  - Directors commended the tightening of macroeconomic policies in 2011 for contributing to declining inflation, stabilizing the exchange rate, and rebuilding international reserves.\n  - Key challenge: balance support for the slowing economy against the risk of eroding confidence, while rebuilding policy buffers.\n  - Risks remain and Directors emphasized resisting premature loosening of policies and accelerating structural reforms.\n- Monetary policy recommendations:\n  - Maintain a cautious monetary policy stance to build on recent gains in stability.\n  - Monetary policy should give priority to reducing inflation and rebuilding reserves further.\n  - Directors emphasized careful consideration before further cuts in policy rates.\n  - In the medium term, move toward market-based policy instruments and a more flexible exchange rate regime.\n- Fiscal policy recommendations:\n  - Fiscal policy should continue to support macroeconomic stability, especially given the recent sizable civil service salary adjustment.\n  - Further focus on containing current non-wage spending and improving the quality of public spending.\n  - Implement planned medium-term tax reforms to broaden the tax base and prepare for a decline in oil revenue.\n- Financial sector and banking system recommendations:\n  - Speed up implementation of the bank restructuring plan.\n  - Banks should recognize nonperforming loans, enhance the size and quality of their capital, and improve corporate governance.\n  - Strengthen the supervisory and regulatory framework, including on bank resolution, and improve transparency in the banking sector.\n  - Directors looked forward to the forthcoming Financial Sector Assessment Program (FSAP) for reform momentum.\n  - Strengthen legislation against money laundering and terrorism financing.\n- State-owned enterprises and structural reform recommendations:\n  - Intensify efforts to reform state-owned enterprises and improve the business environment to enhance growth potential and reduce budgetary and financial sector risks.\n  - Welcome plans for equitization and privatization of a large number of state-owned enterprises, with emphasis on improving accountability and financial discipline.\n- Data and transparency:\n  - Encourage the authorities to increase the frequency, quality, and transparency of economic statistics."
    },
    {
      "heading": "Scenario and near-term outlook",
      "content": "- Near-term stabilization scenario:\n  - The recent reduction of policy interest rates and a modest fiscal expansion are expected to cushion adverse effects from slowing domestic and external demand.\n  - As a result, GDP is projected to grow at 6 percent and inflation to decline to about 10¾ percent for 2012 (8¼ percent y/y at year-end).\n  - International reserves would increase further from the level reached in March 2012, even as the current account deficit would rise somewhat.\n- Risks:\n  - Risks to the scenario are tilted to the downside, including a slowdown in export markets.\n  - Risk that pressures on prices and the exchange rate could resurface if the authorities’ commitment to stabilizing the economy and safeguarding the financial sector is perceived as waning."
    },
    {
      "heading": "Selected economic indicators (highlights from table, 2008–13)",
      "content": "- Real GDP (percent change): 2008: 6.3; 2009: 5.3; 2010: 6.8; 2011: 5.9; 2012 (Proj.): 6.0.\n- Gross national saving (percent of GDP): 2008: 27.8; 2009: 31.6; 2010: 34.9; 2011: 29.3; 2012 (Proj.): 33.5; 2013 (Proj.): 33.1.\n- Gross investment (percent of GDP): 2008: 39.7; 2009: 38.1; 2010: 39.0; 2011: 29.9; 2012 (Proj.): 34.3; 2013 (Proj.): 33.8.\n- CPI (period average): 2008: 23.1; 2009: 6.7; 2010: 18.7; 2011: 10.8; 2012 (Proj.): 7.4.\n- CPI (end of period): 2008: 19.9; 2009: 6.5; 2010: 11.7; 2011: 18.1; 2012 (Proj.): 8.2.\n- Broad money (M2) (percent change, end of period): 2008: 29.0; 2009: 33.3; 2010: 12.1; 2011: 21.6.\n- Credit to the economy (percent change, end of period): 2008: 25.4; 2009: 39.6; 2010: 32.4; 2011: 14.3; 2012 (Proj.): 16.8; 2013 (Proj.): 14.4.\n- Current account balance (including official transfers, percent of GDP): 2008: -11.9; 2009: -6.6; 2010: -4.1; 2011: 0.2; 2012 (Proj.): -0.8; 2013 (Proj.): -0.7.\n- Exports f.o.b. (percent of GDP): 2008: 69.4; 2009: 61.3; 2010: 69.7; 2011: 79.0; 2012 (Proj.): 81.7; 2013 (Proj.): 84.2.\n- Imports f.o.b. (percent of GDP): 2008: 83.6; 2009: 70.2; 2010: 74.7; 2011: 79.3; 2012 (Proj.): 83.5; 2013 (Proj.): 86.2.\n- Gross international reserves (in billions of U.S. dollars, end of period): 2008: 23.0; 2009: 14.1; 2010: 12.4; 2011: 13.5; 2012 (Proj.): 19.0; 2013 (Proj.): 25.7.\n- In months of prospective GNFS imports: 2008: 3.8; 2009: 1.9; 2010: 1.4; 2011: 1.3; 2012 (Proj.): 1.6.\n- Public and publicly guaranteed debt (end of period, percent of GDP): 2008: 42.9; 2009: 51.2; 2010: 54.2; 2011: 48.3; 2012 (Proj.): 48.2; 2013 (Proj.): 46.6.\n- Nominal exchange rate (dong/U.S. dollar, end of period): 2008: 17,483; 2009: 18,479; 2010: 19,498; 2011: 21,034.\n- GDP (in trillions of dong at current market prices): 2008: 1,485; 2009: 1,658; 2010: 1,981; 2011: 2,535; 2012 (Proj.): 2,927; 2013 (Proj.): 3,336.\n- GDP (in billions of U.S. dollars): 2008: 90.3; 2009: 93.2; 2010: 103.6; 2011: 122.7; 2012 (Proj.): 135.8; 2013 (Proj.): 148.8.\n- Per capita GDP (in U.S. dollars): 2008: 1,048; 2009: 1,068; 2010: 1,174; 2011: 1,374; 2012 (Proj.): 1,502; 2013 (Proj.): 1,627.\n\nPublic Information Notice: IMF Executive Board Concludes 2012 Article IV Consultation with Vietnam\n\n---\n\n Content in this bundle\n\n- Country Report (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Vietnam and the IMF\n- Public Information Notices\n- Adobe Acrobat Reader\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/pn1271"
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    "Published: July 6, 2012",
    "Stabilization measures and stronger SBV credibility contributed to an improving macroeconomic picture in early 2012.",
    "GDP growth and inflation:",
    "Credit, reserves, and exchange rate:",
    "Policy response:",
    "Commendations and overarching message:",
    "Monetary policy recommendations:",
    "Fiscal policy recommendations:",
    "Financial sector and banking system recommendations:",
    "State-owned enterprises and structural reform recommendations:",
    "Data and transparency:",
    "Near-term stabilization scenario:",
    "Risks:",
    "Real GDP (percent change): 2008: 6.3; 2009: 5.3; 2010: 6.8; 2011: 5.9; 2012 (Proj.): 6.0.",
    "Gross national saving (percent of GDP): 2008: 27.8; 2009: 31.6; 2010: 34.9; 2011: 29.3; 2012 (Proj.): 33.5; 2013 (Proj.): 33.1.",
    "Gross investment (percent of GDP): 2008: 39.7; 2009: 38.1; 2010: 39.0; 2011: 29.9; 2012 (Proj.): 34.3; 2013 (Proj.): 33.8.",
    "CPI (period average): 2008: 23.1; 2009: 6.7; 2010: 18.7; 2011: 10.8; 2012 (Proj.): 7.4.",
    "CPI (end of period): 2008: 19.9; 2009: 6.5; 2010: 11.7; 2011: 18.1; 2012 (Proj.): 8.2.",
    "Broad money (M2) (percent change, end of period): 2008: 29.0; 2009: 33.3; 2010: 12.1; 2011: 21.6.",
    "Credit to the economy (percent change, end of period): 2008: 25.4; 2009: 39.6; 2010: 32.4; 2011: 14.3; 2012 (Proj.): 16.8; 2013 (Proj.): 14.4.",
    "Current account balance (including official transfers, percent of GDP): 2008: -11.9; 2009: -6.6; 2010: -4.1; 2011: 0.2; 2012 (Proj.): -0.8; 2013 (Proj.): -0.7.",
    "Exports f.o.b. (percent of GDP): 2008: 69.4; 2009: 61.3; 2010: 69.7; 2011: 79.0; 2012 (Proj.): 81.7; 2013 (Proj.): 84.2.",
    "Imports f.o.b. (percent of GDP): 2008: 83.6; 2009: 70.2; 2010: 74.7; 2011: 79.3; 2012 (Proj.): 83.5; 2013 (Proj.): 86.2.",
    "Gross international reserves (in billions of U.S. dollars, end of period): 2008: 23.0; 2009: 14.1; 2010: 12.4; 2011: 13.5; 2012 (Proj.): 19.0; 2013 (Proj.): 25.7.",
    "In months of prospective GNFS imports: 2008: 3.8; 2009: 1.9; 2010: 1.4; 2011: 1.3; 2012 (Proj.): 1.6.",
    "Public and publicly guaranteed debt (end of period, percent of GDP): 2008: 42.9; 2009: 51.2; 2010: 54.2; 2011: 48.3; 2012 (Proj.): 48.2; 2013 (Proj.): 46.6.",
    "Nominal exchange rate (dong/U.S. dollar, end of period): 2008: 17,483; 2009: 18,479; 2010: 19,498; 2011: 21,034.",
    "GDP (in trillions of dong at current market prices): 2008: 1,485; 2009: 1,658; 2010: 1,981; 2011: 2,535; 2012 (Proj.): 2,927; 2013 (Proj.): 3,336.",
    "GDP (in billions of U.S. dollars): 2008: 90.3; 2009: 93.2; 2010: 103.6; 2011: 122.7; 2012 (Proj.): 135.8; 2013 (Proj.): 148.8.",
    "Per capita GDP (in U.S. dollars): 2008: 1,048; 2009: 1,068; 2010: 1,174; 2011: 1,374; 2012 (Proj.): 1,502; 2013 (Proj.): 1,627.",
    "[Country Report (PDF)](/external/pubs/ft/scr/2012/cr12165.pdf){rel=\"external\" type=\"application/pdf\"}",
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    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](https://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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