{
  "title": "IMF Executive Board Completes the 2019 Article IV Consultation with Vietnam",
  "publication": "IMF News, July 16, 2019",
  "sourceUrl": "https://www.imf.org/en/news/articles/2019/07/16/pr19283-vientam-imf-executive-board-completes-2019-article-iv-consultation",
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  "summary": "Real GDP growth reached a 10-year high of 7.1 percent in 2018.",
  "publishDate": "2019-07-16",
  "sections": [
    {
      "heading": "Macroeconomic performance and outlook",
      "content": "- Real GDP growth reached a 10-year high of 7.1 percent in 2018.\n- Growth is expected to soften to 6.5 percent in 2019 and to remain around 6.5 percent over the medium term, reflecting weak external conditions.\n- Inflation averaged 3.5 percent in 2018; CPI (period average) projections: 3.6 percent for 2018 (est.), 3.8 percent for 2019 (proj.).\n- CPI (end of period) values shown: 3.7 percent for 2018 (est.).\n- Core inflation (end of period) values shown: 2.2 percent for 2018 (est.).\n- Drivers of growth cited: healthy income and consumption growth of a growing and urbanizing middle class, a strong harvest, and a surging manufacturing sector.\n- External conditions noted: competitive labor costs, diversified trade structure, recently signed free trade agreements; but external weakness expected to moderate growth."
    },
    {
      "heading": "Fiscal and public debt developments",
      "content": "- Public debt reduced to 55.5 percent of GDP at end-2018, down from 60 percent at end-2016.\n- State budget finance indicators (in percent of GDP):\n  - Revenue and grants: 23.4 percent (2018 est.), 23.3 percent (2019 proj.).\n  - Oil revenue: 0.7 percent (2018 est.).\n  - Expenditure: 28.8 percent (2018 est.), 27.6 percent (2019 proj.).\n  - Expense: 20.1 percent (2018 est.), 20.0 percent (2019 proj.).\n  - Net acquisition of nonfinancial assets: 7.6 percent (2018 est.).\n  - Net lending (+)/borrowing (-): -4.4 percent (2018 est.), -4.2 percent (2019 proj.).\n- Directors welcomed fiscal consolidation efforts, including:\n  - Improvements in tax policy and administration, including higher environmental taxes.\n  - Tightening of government guarantees and lower current spending.\n- Policy guidance: further consolidation should focus on quality of adjustment to keep public debt on a declining path and create room for priority infrastructure and social spending, prepare for rapid prospective population aging, and address climate change and digitalization.\n- Revenue-enhancing measures recommended: broadening bases, including unifying VAT rates, a property tax, reducing exemptions, and improving tax administration.\n- Need to continue rationalizing the public sector wage bill and improving public financial and investment management."
    },
    {
      "heading": "Monetary, financial sector, and external policies",
      "content": "- The State Bank of Vietnam (SBV) has continued to reduce credit growth; liquidity remained ample in 2018 aided by external inflows and the growing capital market.\n- SBV guidance and plans:\n  - Guiding banks to adopt Basel II standards in 2020.\n  - Developing plans to recapitalize systemic state-owned commercial banks.\n- External position in 2018 described as substantially stronger than warranted by fundamentals; authorities intervened in both directions to keep the Dong within a narrow band and reserve accumulation continued.\n- Gross international reserves (in billions of U.S. dollars): 55.3 (2018 est.), 66.2 (2019 proj.), 77.7 (2020 proj.).\n- Money and credit (percent change, end of period):\n  - Broad money (M2): 15.5 (2018 est.), 14.9 (2019 proj.).\n  - Credit to the economy: 13.7 (2018 est.), 13.1 (2019 proj.).\n- Balance of payments (in percent of GDP):\n  - Exports f.o.b.: 101.2 (2018 est.), 104.8 (2019 proj.), 108.8 (2020 proj.).\n  - Imports f.o.b.: 94.6 (2018 est.), 98.7 (2019 proj.), 103.0 (2020 proj.).\n  - Current account balance (including official transfers): 2.4 (2016), (other years as table).\n- Directors encouraged:\n  - Limiting interventions to maintaining orderly market conditions.\n  - Greater exchange rate flexibility while gradually building reserves.\n  - Well-sequenced modernization of the monetary framework with IMF technical assistance.\n- Financial sector reforms noted:\n  - Shift of bank models toward lending to households and private firms.\n  - More prudent aggregate credit growth limits.\n  - Deepening of bond and equity markets.\n  - Adoption of Basel II standards and need for swift recapitalization of systemic state-owned banks.\n  - Construction of a modern macroprudential framework to replace quantitative credit limits."
    },
    {
      "heading": "Structural reforms, governance, and capacity development",
      "content": "- Reforms underway: gradual modernization of monetary and fiscal systems; blocks of shares in large state enterprises being offered for sale.\n- Anti-corruption and governance:\n  - Fight against grand corruption since 2016 has resulted in significant sentences.\n  - A new anti-corruption law has been approved.\n- Other institutional work:\n  - A PIMA has been completed and the AML/CFT system is about to be reviewed.\n  - IMF staff engaged in a wide-ranging capacity development program with Vietnam.\n- Directors' priorities for reform:\n  - Strengthen anti-corruption legislation further.\n  - Reform and improve oversight of state-owned enterprises.\n  - Implement Public Investment Management Assessment recommendations.\n  - Improve statistical systems, data provision, and transparency.\n  - Strengthen the AML/CFT regime and address any issues identified by the forthcoming peer review by the Financial Action Task Force’s Asia Pacific Group.\n- Recommendations to boost private investment and productivity:\n  - Reduce remaining barriers to investment, including improving access to land and credit.\n  - Reduce administrative and licensing procedures and trade barriers to level the playing field for the domestic private sector."
    },
    {
      "heading": "Executive Board assessment and policy priorities",
      "content": "- Directors commended Vietnamese authorities for prudent policies contributing to resilience and impressive growth amid rising trade tensions and external uncertainties.\n- Agreed policy priorities should continue to focus on:\n  - Building buffers.\n  - Strengthening governance.\n  - Boosting productivity and private sector‑led growth."
    },
    {
      "heading": "Key quantitative indicators (selected)",
      "content": "- Real GDP (percent change): 7.1 (2018 est.), 6.5 (2019 proj.), 6.5 (2020 proj.).\n- CPI (period average): 3.5 (2018 est.), 3.8 (2019 proj.).\n- Public and publicly guaranteed debt (end of period): 55.6 (2018 est.), 54.4 (2019 proj.), 53.3 (2020 proj.).\n- Gross international reserves (in billions of U.S. dollars): 55.3 (2018 est.), 66.2 (2019 proj.), 77.7 (2020 proj.).\n- GDP (in billions of U.S. dollars): 241.3 (2018 est.), 260.5 (2019 proj.), 282.4 (2020 proj.).\n- Per capita GDP (in U.S. dollars): 2551.1 (2018 est.), 2728.4 (2019 proj.), 2929.2 (2020 proj.).\n\nIMF Press Release No. 19/283, July 16, 2019.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\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/2019/07/16/pr19283-vientam-imf-executive-board-completes-2019-article-iv-consultation"
    }
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    "Published: July 16, 2019",
    "Real GDP growth reached a 10-year high of 7.1 percent in 2018.",
    "Growth is expected to soften to 6.5 percent in 2019 and to remain around 6.5 percent over the medium term, reflecting weak external conditions.",
    "Inflation averaged 3.5 percent in 2018; CPI (period average) projections: 3.6 percent for 2018 (est.), 3.8 percent for 2019 (proj.).",
    "CPI (end of period) values shown: 3.7 percent for 2018 (est.).",
    "Core inflation (end of period) values shown: 2.2 percent for 2018 (est.).",
    "Drivers of growth cited: healthy income and consumption growth of a growing and urbanizing middle class, a strong harvest, and a surging manufacturing sector.",
    "External conditions noted: competitive labor costs, diversified trade structure, recently signed free trade agreements; but external weakness expected to moderate growth.",
    "Public debt reduced to 55.5 percent of GDP at end-2018, down from 60 percent at end-2016.",
    "State budget finance indicators (in percent of GDP):",
    "Directors welcomed fiscal consolidation efforts, including:",
    "Policy guidance: further consolidation should focus on quality of adjustment to keep public debt on a declining path and create room for priority infrastructure and social spending, prepare for rapid prospective population aging, and address climate change and digitalization.",
    "Revenue-enhancing measures recommended: broadening bases, including unifying VAT rates, a property tax, reducing exemptions, and improving tax administration.",
    "Need to continue rationalizing the public sector wage bill and improving public financial and investment management.",
    "The State Bank of Vietnam (SBV) has continued to reduce credit growth; liquidity remained ample in 2018 aided by external inflows and the growing capital market.",
    "SBV guidance and plans:",
    "External position in 2018 described as substantially stronger than warranted by fundamentals; authorities intervened in both directions to keep the Dong within a narrow band and reserve accumulation continued.",
    "Gross international reserves (in billions of U.S. dollars): 55.3 (2018 est.), 66.2 (2019 proj.), 77.7 (2020 proj.).",
    "Money and credit (percent change, end of period):",
    "Balance of payments (in percent of GDP):",
    "Directors encouraged:",
    "Financial sector reforms noted:",
    "Reforms underway: gradual modernization of monetary and fiscal systems; blocks of shares in large state enterprises being offered for sale.",
    "Anti-corruption and governance:",
    "Other institutional work:",
    "Directors' priorities for reform:",
    "Recommendations to boost private investment and productivity:",
    "Directors commended Vietnamese authorities for prudent policies contributing to resilience and impressive growth amid rising trade tensions and external uncertainties.",
    "Agreed policy priorities should continue to focus on:",
    "Real GDP (percent change): 7.1 (2018 est.), 6.5 (2019 proj.), 6.5 (2020 proj.).",
    "CPI (period average): 3.5 (2018 est.), 3.8 (2019 proj.).",
    "Public and publicly guaranteed debt (end of period): 55.6 (2018 est.), 54.4 (2019 proj.), 53.3 (2020 proj.).",
    "Gross international reserves (in billions of U.S. dollars): 55.3 (2018 est.), 66.2 (2019 proj.), 77.7 (2020 proj.).",
    "GDP (in billions of U.S. dollars): 241.3 (2018 est.), 260.5 (2019 proj.), 282.4 (2020 proj.).",
    "Per capita GDP (in U.S. dollars): 2551.1 (2018 est.), 2728.4 (2019 proj.), 2929.2 (2020 proj.).",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[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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