{
  "title": "IMF Executive Board Concludes 2020 Article IV Consultation with Vietnam",
  "publication": "IMF News, March 1, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/03/01/pr2155-vietnam-imf-executive-board-concludes-2020-article-iv-consultation",
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  "summary": "The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Vietnam.",
  "publishDate": "2021-03-01",
  "sections": [
    {
      "heading": "Overview",
      "content": "- The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Vietnam.\n- Vietnam entered 2020 after a prolonged period of high growth driven by market-oriented reform and FDI-led manufacturing, lifting it to lower middle-income status.\n- In recent years, growth averaged 7 percent and progress was made towards the Sustainable Development Goals, with emphasis on “leaving no one behind.”"
    },
    {
      "heading": "Economic performance and external position (2019–2020)",
      "content": "- 2019:\n  - Economic activity remained strong with stable inflation.\n  - Rate of new business creation reached a six-year high.\n  - Public and publicly guaranteed debt contained at 43 percent of GDP, below the 65 percent statutory limit.\n  - Current account surplus rose to 3.8 percent of GDP due to sharply slowing imports of raw materials and intermediate goods, record tourist arrivals, and large remittance flows.\n  - External position in 2019 assessed to be substantially stronger than warranted by fundamentals due to structural features.\n- 2020:\n  - Real GDP growth was 2.9 percent.\n  - Current account surplus projected to narrow to 2.2 percent in 2020 due to collapsing tourism receipts and weaker remittances, partially offset by subdued imports and lower income payments.\n  - Inflation projected to remain close to authorities’ target at 4 percent.\n  - Strong recovery expected in 2021 as domestic and foreign activity normalize; fiscal and monetary policies expected to remain supportive, though less so than in 2020."
    },
    {
      "heading": "Policy response to COVID-19 and policy stance",
      "content": "- Health and economic measures:\n  - Early and concerted measures taken to limit health and economic fallout helped ease lockdown restrictions and contain the associated policy support package relative to other countries.\n- Fiscal policy:\n  - Focused on temporary support to firms and vulnerable households.\n  - Fiscal consolidation efforts in prior years helped contain public debt.\n  - Directors recommended fiscal measures geared towards protecting workers and vulnerable households, including through improved budgetary execution and enhanced targeting.\n  - Once recovery is firmly underway, gradual fiscal adjustment should center on revenue mobilization to create space for priority social and infrastructure spending and support greener and more inclusive growth.\n  - Need to upgrade fiscal policy frameworks to safeguard fiscal sustainability.\n- Monetary and financial sector policy:\n  - Monetary policy was eased to maintain abundant liquidity in the banking system.\n  - Directors recommended maintaining an accommodative monetary policy stance while remaining mindful of underlying banking sector vulnerabilities.\n  - Emphasized that corporate support for viable firms should be gradually phased out and regulatory forbearance normalized.\n  - Financial risks should be closely monitored and problem loans addressed in a timely manner.\n  - Medium term objectives include enhancing private debt restructuring frameworks and further strengthening banks’ capital position in the context of adopting Basel II requirements.\n  - In the context of reserve adequacy, Directors welcomed efforts to allow greater two-way exchange rate flexibility and modernize the monetary policy framework."
    },
    {
      "heading": "Structural reforms and medium-term priorities",
      "content": "- Directors called for steadfast reform efforts to:\n  - Remove remaining barriers to private investment.\n  - Enhance social safety nets.\n  - Improve the business environment, enhance productivity, and boost post-pandemic potential growth.\n- Priority areas identified:\n  - Reducing labor skill-mismatches.\n  - Promoting digital transformation.\n  - Ensuring a level playing field, particularly for SMEs.\n  - Improving economic institutions and strengthening governance.\n- Some Directors urged caution in interpreting EBA model results, noting they may not adequately capture Vietnam-specific structural factors and measurement issues."
    },
    {
      "heading": "Executive Board Assessment — key messages",
      "content": "- The COVID-19 pandemic disrupted a prolonged period of high growth and improvements in living standards.\n- The authorities’ decisive and comprehensive pandemic response, supported by strong fundamentals and policy buffers, was instrumental in ensuring the economy’s resilience.\n- Risks to the outlook are tilted to the downside; measures are needed to limit permanent scarring and promote sustained, inclusive, and greener growth."
    },
    {
      "heading": "Selected economic and financial indicators (2016–21) — key figures",
      "content": "- Output:\n  - Real GDP (percent change): 2016: 6.7; 2017: 6.9; 2018: 7.1; 2019: 7.0; 2020: 2.9; 2021: 6.5\n- Prices (percent change):\n  - CPI (period average): 2016: 2.7; 2017: 3.5; 2018: 2.8; 2019: 3.2; 2020: 4.0\n  - CPI (end of period): 2016: 4.7; 2017: 2.6; 2018: 3.0; 2019: 5.2; 2020: 0.2; 2021: 3.7\n  - Core inflation (end of period): 2016: 1.9; 2017: 1.3; 2018: 1.7; 2019: 1.0; 2020: 2.3\n- Saving and investment (in percent of GDP):\n  - Gross national saving: 2016: 26.6; 2017: 25.7; 2018: 28.2; 2019: 30.4; 2020: 28.6; 2021: 29.3\n  - Gross investment: 2016: 26.3; 2017: 26.4; 2018: 27.0; 2019: (not listed); Private: 2016: 20.4; 2017: 20.5; 2018: 20.8; 2019: 21.0; 2020: 20.2; 2021: 21.4\n  - Public: 2016: 5.9; 2017: 5.8; 2018: 5.5; 2019: 5.6; 2020: 6.2\n- State budget finances (in percent of GDP):\n  - Revenue and grants: 2016: 19.1; 2017: 19.6; 2018: 19.5; 2019: 16.2; 2020: 15.8; 2021: (not listed)\n  - Of which: Oil revenue: 2016: 0.7; 2017: 0.8; 2018: 0.9; 2019: 0.6; 2020: 0.4\n  - Expenditure: 2016: 22.2; 2017: 21.5; 2018: 22.8; 2019: 21.6; 2020: (not listed)\n  - Expense: 2016: 16.3; 2017: 15.7; 2018: 15.0; 2019: 17.2; 2020: 15.4; 2021: 14.9\n  - Net lending (+)/borrowing(-): 2016: -3.2; 2017: -2.0; 2018: -1.0; 2019: -3.3; 2020: -5.4; 2021: -4.7\n  - Net lending /borrowing including EBFs: 2017: …; 2018: -0.5; 2019: -2.6; 2020: -4.3; 2021: -3.8\n  - Public and publicly guaranteed debt (end of period): 2016: 47.6; 2017: 46.3; 2018: 43.6; 2019: 43.4; 2020: 46.6; 2021: 47.1\n- Money and credit (percent change, end of period):\n  - Broad money (M2): 2016: 18.4; 2017: 12.4; 2018: 14.8; 2019: 13.8; 2020: (not listed)\n  - Credit to the economy: 2016: 18.8; 2017: 17.4; 2018: 12.7; 2019: 12.8; 2020: 12.1; 2021: 12.3\n- Balance of payments (in percent of GDP, unless otherwise indicated):\n  - Current account balance (including official transfers): 2016: -0.6; 2017: 3.8; 2018: 2.2; 2019: (not listed); 2020: (projection) 2.2\n  - Exports f.o.b.: 2016: 70.0; 2017: 77.6; 2018: 80.2; 2019: 82.5; 2020: 85.9\n  - Imports f.o.b.: 2016: 65.7; 2017: 73.7; 2018: 74.7; 2019: 73.9; 2020: 78.1\n  - Capital and financial account: 2016: 4.3; 2017: (not listed); 2018: 7.2\n  - Gross international reserves (in billions of U.S. dollars): 2016: 36.7; 2017: 49.2; 2018: 55.3; 2019: 78.5; 2020: 94.8; 2021: 113.7\n  - In months of prospective GNFS imports: 2016: 2.0; 2017: 2.4; 2018: 2.5; 2019: 4.1\n  - Total external debt (end of period): 2016: 35.8; 2017: 38.9; 2018: 36.4; 2019: 37.1; 2020: 38.5; 2021: 38.6\n  - Nominal exchange rate (dong/U.S. dollar, end of period): 2016: 22,761; 2017: 22,698; 2018: 23,175; 2019: 23,173; 2020: 23,223\n- Memorandum items:\n  - GDP (in trillions of dong at current market prices): 2016: 5,639; 2017: 6,294; 2018: 6,998; 2019: 7,654; 2020: 7,912; 2021: 8,630\n  - GDP (in billions of U.S. dollars): 2016: 252.1; 2017: 277.1; 2018: 304.0; 2019: 329.5; 2020: 340.8; 2021: 364.1\n  - Per capita GDP (in U.S. dollars): 2016: 2,693; 2017: 2,929; 2018: 3,182; 2019: 3,416; 2020: 3,500; 2021: 3,704\n\nSource: IMF Executive Board Concluding Statement of the 2020 Article IV Consultation with Vietnam (Press Release No. 21/55).\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- People's Republic of China and the IMF\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/2021/03/01/pr2155-vietnam-imf-executive-board-concludes-2020-article-iv-consultation"
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    "Published: March 1, 2021",
    "The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Vietnam.",
    "Vietnam entered 2020 after a prolonged period of high growth driven by market-oriented reform and FDI-led manufacturing, lifting it to lower middle-income status.",
    "In recent years, growth averaged 7 percent and progress was made towards the Sustainable Development Goals, with emphasis on “leaving no one behind.”",
    "2019:",
    "2020:",
    "Health and economic measures:",
    "Fiscal policy:",
    "Monetary and financial sector policy:",
    "Directors called for steadfast reform efforts to:",
    "Priority areas identified:",
    "Some Directors urged caution in interpreting EBA model results, noting they may not adequately capture Vietnam-specific structural factors and measurement issues.",
    "The COVID-19 pandemic disrupted a prolonged period of high growth and improvements in living standards.",
    "The authorities’ decisive and comprehensive pandemic response, supported by strong fundamentals and policy buffers, was instrumental in ensuring the economy’s resilience.",
    "Risks to the outlook are tilted to the downside; measures are needed to limit permanent scarring and promote sustained, inclusive, and greener growth.",
    "Output:",
    "Prices (percent change):",
    "Saving and investment (in percent of GDP):",
    "State budget finances (in percent of GDP):",
    "Money and credit (percent change, end of period):",
    "Balance of payments (in percent of GDP, unless otherwise indicated):",
    "Memorandum items:",
    "[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)",
    "[People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)",
    "[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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