## Vietnam: Staff Report for the 2014 Article IV Consultation

_IMF Staff Country Reports, October 16, 2014_

## Source details

**Canonical URL:** [Vietnam: Staff Report for the 2014 Article IV Consultation](https://www.imf.org/en/publications/cr/issues/2016/12/31/vietnam-staff-report-for-the-2014-article-iv-consultation-42391)

## Other formats

- [Markdown version](/en/publications/cr/issues/2016/12/31/vietnam-staff-report-for-the-2014-article-iv-consultation-42391/index.md)
- [Structured JSON version](/en/publications/cr/issues/2016/12/31/vietnam-staff-report-for-the-2014-article-iv-consultation-42391/index.json)
- [Bundle manifest](/en/publications/cr/issues/2016/12/31/vietnam-staff-report-for-the-2014-article-iv-consultation-42391/bundle-manifest.json)

## Bibliographic details
- Published: October 16, 2014
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498305181.002

---

### Context and recent performance
- Economic performance has improved over the last year; the recovery is taking hold while domestic activity remains weak, in part constrained by weak banks and inefficient state-owned enterprises (SOEs).
- Inflation has declined.
- The current account remains in large surplus.
- International reserves have increased.
- Authorities prioritize: preserving macroeconomic stability; tackling banking sector vulnerabilities; reforming SOEs. Implementation has been gradual in some key areas.

### Outlook and risks
- Growth is projected to recover gradually over the coming years.
- The current account is projected to return to a deficit while inflation remains contained.
- On current policies, public debt is projected to reach 60 percent of GDP.
- Risks identified:
  - Weaker trading partner growth.
  - Geopolitical tensions.
  - Slow structural reforms.
  - Delayed fiscal consolidation.
- Policy note: Early conclusion to key trade negotiations would be growth-positive.

### Fiscal policy findings and recommendations
- Deficits have been sizable and rising public debt requires attention.
- Recommended approach: a medium-term growth-friendly consolidation.
  - Emphasize enhancing revenue.
  - Rationalize unproductive expenditures.
  - Preserve crucial social and capital spending.
- Rationale: This would ensure public debt sustainability and create space to address contingent liabilities from banking sector and SOE restructuring.

### Monetary and exchange rate policy
- The current monetary policy stance is appropriate.
- Greater exchange rate flexibility is recommended to:
  - Help buffer external shocks.
  - Facilitate improved reserve adequacy.
  - Lay groundwork for shifting toward using inflation as a nominal anchor over the medium term.

### Banking sector reform
- Several policy measures have been taken recently, but the overall gradual approach is likely to:
  - Continue constraining credit growth.
  - Keep the system susceptible to shocks and significant asset deterioration.
- Recommended measures:
  - More expeditious recognition of nonperforming loans.
  - Bank restructuring and orderly resolution.
- Expected benefits: Support robust credit creation and macro-financial stability.

### State-owned enterprise (SOE) reform
- Progress is being made on SOE reform.
- Recommended actions:
  - Implement restructuring plans.
  - Accelerate equitization.
  - Strengthen corporate governance.
  - Ensure a level playing field.
- Expected benefits: More efficient resource allocation, strengthened banks, and higher future growth.

*International Monetary Fund. Vietnam: Staff Report for the 2014 Article IV Consultation.*

---

## Content in this bundle

- **Cr14311**
  - [Cr14311 (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2014/_cr14311.pdf.md){rel="alternate" type="text/markdown"}
  - [Cr14311 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2014/_cr14311.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/cr/issues/2016/12/31/vietnam-staff-report-for-the-2014-article-iv-consultation-42391_