{
  "title": "IMF Executive Board Concludes 2016 Article IV Consultation with Vietnam",
  "publication": "IMF News, June 27, 2016",
  "sourceUrl": "https://www.imf.org/en/news/articles/2016/07/06/13/45/pr16307-vietnam-imf-executive-board-concludes-2016-article-iv-consultation",
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  "summary": "Vietnam’s economy experienced solid growth with low inflation; robust performance through most of 2015 driven by rapid export growth, foreign direct investment (FDI), and strong domestic demand.",
  "publishDate": "2016-06-27",
  "sections": [
    {
      "heading": "Economic performance and near-term outlook",
      "content": "- Vietnam’s economy experienced solid growth with low inflation; robust performance through most of 2015 driven by rapid export growth, foreign direct investment (FDI), and strong domestic demand.\n- Manufacturing and exports moderated near year-end 2015 due to slowing external demand.\n- Agriculture production fell sharply in the beginning of 2016 owing to a severe drought and arable land salinization.\n- Inflation:\n  - Declined below one percent in 2015 before ticking upward in early 2016 due to higher food and administered prices.\n- Balance of payments and reserves:\n  - The current account narrowed sharply from rising imports.\n  - Gross international reserves declined in the second half of 2015 before recovering in early 2016.\n- 2016 outlook:\n  - Growth is projected to moderate to around 6 percent, reflecting the adverse agriculture shock, lower external demand and spillovers of tighter global financial conditions.\n  - Headline inflation is projected to rise modestly.\n  - Reserves are expected to increase to around 2 months of imports.\n  - Public debt is expected to reach around 62 percent of GDP.\n- Risks and opportunities:\n  - Downside risks: high and rising public debt, slow NPL resolution progress, prolonged drought, tighter or more volatile global financial conditions, weak growth in key advanced and emerging economies.\n  - Upside opportunities: rapid implementation of recently signed trade agreements, which would usher in productivity gains, fuel exports and incentivize reforms."
    },
    {
      "heading": "Fiscal policy, public debt, and recommendations",
      "content": "- Recent fiscal stance:\n  - Fiscal policy has been loose in recent years; the deficit was 5.9 percent of GDP last year.\n  - Revenues rose strongly, reflecting tax and non-tax collection.\n  - Expenditure was higher than planned due to carry-forward spending by local governments, and higher capital, social and interest spending.\n  - Public debt has risen sharply.\n- Executive Directors' guidance:\n  - Growth-friendly fiscal consolidation is key to reversing the rise in public debt and creating space for critical social and development expenditures.\n  - Authorities were urged to begin taking measures this year to reduce the fiscal deficit to 3 percent of GDP by 2020.\n  - Importance of structural revenue-enhancing measures: rationalizing exemptions and incentives, broadening the tax base, and further strengthening revenue administration.\n  - Encourage civil service reform to rationalize the public wage bill, improve spending efficiency, and use equitization receipts to finance the deficit."
    },
    {
      "heading": "Monetary policy, reserves, and financial sector stability",
      "content": "- Monetary stance and exchange rate:\n  - Monetary policy was accommodative over most of last year amid falling inflation, and credit growth was robust.\n  - Liquidity conditions were tightened around year-end as global financial volatility increased, and the exchange-rate regime was made more flexible.\n  - Directors supported the current monetary policy stance and welcomed the shift to a more flexible exchange rate regime.\n  - Authorities were encouraged to remain vigilant should price pressures emerge.\n- Reserves and monetary framework:\n  - Directors called on the authorities to continue to build international reserves, further strengthen the monetary policy framework, and undertake institutional and operational reforms to support a gradual shift toward using inflation as the nominal anchor.\n- Financial stability and banking sector reforms:\n  - Recent rise in credit growth could pose risks to financial stability.\n  - Directors welcomed the authorities’ proposals to tighten macroprudential policy and recommended further tightening if needed.\n  - Need for further efforts on banking sector reforms, including:\n    - Measures to resolve nonperforming loans (NPLs).\n    - Recapitalize banks by existing shareholders.\n    - Enhance governance, risk management, and supervision.\n    - Adopt international financial reporting standards."
    },
    {
      "heading": "Structural reforms and growth-enhancing measures",
      "content": "- Directors encouraged intensifying the pace of structural reforms to boost productivity and long-term growth potential.\n- State-owned enterprise (SOE) reforms:\n  - Progress made on the legal framework for SOE reforms was welcomed.\n  - Continued efforts urged, including greater transparency and a level-playing field with the private sector.\n- Human capital and business climate:\n  - Recommended improvements in education to strengthen human capital and address skills mismatches.\n  - Complementary measures to foster a conducive business climate."
    },
    {
      "heading": "Selected economic indicators (as reported)",
      "content": "- Population: 91.7 million\n- Per capita GDP 2015 (US$): 2,088\n- Quota (current): SDR 1,153.10 millions/ 100 percent of quota\n- Poverty rate (as of 2014): 13.5\n- Main products and exports: electronics, garment, crude oil, rice, coffee, and rubber\n- Key export markets: United States, Euro Area, Japan, Developing Asia\n\n- Output\n  - Real GDP growth (%): 2012: 5.2; 2013: 5.4; 2014: 6.0; 2015: 6.7; 2016 Est. Proj.: 6.1\n- Employment\n  - Unemployment (%): 2012: 2.7; 2013: 2.8; 2014: 2.1; 2015: 2.4; 2016 Est. Proj.: (blank)\n- Prices\n  - Inflation (%, end of period): 2012: 6.8; 2013: 1.8; 2014: 0.6; 2015: 3.5; 2016 Est. Proj.: (blank)\n- General government finances\n  - Revenue and grants (% GDP): 2012: 22.6; 2013: 23.1; 2014: 21.9; 2015: 23.7; 2016 Est. Proj.: 22.9\n  - Expenditure (% GDP): 2012: 29.4; 2013: 30.5; 2014: 28.0; 2015: 29.6; 2016 Est. Proj.: 29.5\n  - Net lending (+)/borrowing(-) (% GDP): 2012: -6.8; 2013: -7.4; 2014: -6.1; 2015: -5.9; 2016 Est. Proj.: -6.5\n  - Public debt (% GDP): 2012: 47.9; 2013: 51.8; 2014: 55.1; 2015: 58.3; 2016 Est. Proj.: 62.1\n- Money and credit\n  - Broad money (% change): 2012: 18.5; 2013: 18.8; 2014: 17.7; 2015: 16.2; 2016 Est. Proj.: 19.7\n  - Credit to the private sector (% change): 2012: 8.7; 2013: 12.7; 2014: 13.8; 2015: 17.4; 2016 Est. Proj.: (blank)\n  - Nominal short-term lending rate (% less than one year): 2012: 12.4; 2013: 9.7; 2014: 8.5; 2015: ...; 2016 Est. Proj.: (blank)\n- Balance of payments\n  - Current account (% GDP): 2012: 4.5; 2013: 5.1; 2014: 0.5; 2015: 0.3; 2016 Est. Proj.: (blank)\n  - FDI (% GDP): 2012: 4.6; 2013: 4.1; 2014: 4.3; 2015: 5.6; 2016 Est. Proj.: 6.5\n  - Reserves (months imports): 2012: 2.2; 2013: 2.0; 2014: 1.9; 2015: (blank); 2016 Est. Proj.: (blank)\n  - External debt (% GDP): 2012: 37.4; 2013: 37.3; 2014: 38.3; 2015: 43.1; 2016 Est. Proj.: 45.2\n- Exchange rate\n  - REER (% change): 2012: 6.2; 2013: 3.4\n\nPress Release No. 16/307, June 27, 2016 — IMF Communications Department\n\n---\n\n Content in this bundle\n\n- Pr16307v (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- Vietnam and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\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/2016/07/06/13/45/pr16307-vietnam-imf-executive-board-concludes-2016-article-iv-consultation"
    }
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    "Published: June 27, 2016",
    "Vietnam’s economy experienced solid growth with low inflation; robust performance through most of 2015 driven by rapid export growth, foreign direct investment (FDI), and strong domestic demand.",
    "Manufacturing and exports moderated near year-end 2015 due to slowing external demand.",
    "Agriculture production fell sharply in the beginning of 2016 owing to a severe drought and arable land salinization.",
    "Inflation:",
    "Balance of payments and reserves:",
    "2016 outlook:",
    "Risks and opportunities:",
    "Recent fiscal stance:",
    "Executive Directors' guidance:",
    "Monetary stance and exchange rate:",
    "Reserves and monetary framework:",
    "Financial stability and banking sector reforms:",
    "Directors encouraged intensifying the pace of structural reforms to boost productivity and long-term growth potential.",
    "State-owned enterprise (SOE) reforms:",
    "Human capital and business climate:",
    "Population: 91.7 million",
    "Per capita GDP 2015 (US$): 2,088",
    "Quota (current): SDR 1,153.10 millions/ 100 percent of quota",
    "Poverty rate (as of 2014): 13.5",
    "Main products and exports: electronics, garment, crude oil, rice, coffee, and rubber",
    "Key export markets: United States, Euro Area, Japan, Developing Asia",
    "Output",
    "Employment",
    "Prices",
    "General government finances",
    "Money and credit",
    "Balance of payments",
    "Exchange rate",
    "[Pr16307v (PDF)](/external/lang/vietnamese/np/sec/pr/2016/pr16307v.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[Vietnam and the IMF](http://www.imf.org/external/country/VNM/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://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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