Staff Completes 2020 Article IV Mission to Vietnam

November 17, 2020

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.

• Thanks to Vietnam’s swift actions to contain the health and economic fallout of COVID-19, growth this year is expected to be 2.4 percent, among the highest in the world.
• Macroeconomic policies should remain accommodative, especially fiscal policy, until the recovery is firmly underway.
• Given considerable uncertainty, proactively adjusting the size and composition of the policy support will be important.
• To make the most of Vietnam’s considerable potential, continued emphasis on structural reforms is needed to boost productivity and reduce economic imbalances.

Washington, DC: An International Monetary Fund (IMF) team led by Era Dabla-Norris had a virtual mission during October 15 – Nov 13, 2020, to conduct discussions for the 2020 Article IV consultation with Vietnam. The team exchanged views with senior officials of the State Bank of Vietnam (SBV), the Ministry of Finance (MOF), the Central Economic Commission (CEC), the Ministry of Planning and Investment (MPI) and other government agencies. It also met with representatives from the private sector, think tanks, academia and financial institutions.

In addition, the SBV and IMF co-hosted a high-level seminar on ‘Securing Growth and Resilience in the ASEAN: Policies for the Post-COVID-19 World’, at the margins of the ASEAN Summit in Hanoi on November 10, 2020.

At the end of the visit, Ms. Dabla-Norris issued the following statement:

‘Vietnam’s growth this year is expected to be 2.4 percent, among the highest in the world, thanks to its decisive steps to contain the health and economic fallout from COVID-19. The fiscal response has been largely geared towards supporting vulnerable households and firms and has benefited from prudent policies adopted in the past. Monetary policy easing and temporary financial relief measures by the SBV have alleviated liquidity pressures, lowered the cost of funding, and facilitated continued flow of credit.

‘A strong recovery is expected in 2021. Growth is projected to strengthen further to 6.5 percent as normalization of domestic and foreign economic activity continues. Fiscal and monetary policies are expected to remain supportive, although to a lesser extent than in 2020. Inflation is expected to remain close to the authorities’ target at 4 percent.

‘The outlook is subject to substantial uncertainties stemming from possible renewed outbreaks, a protracted global recovery, ongoing trade tensions, and corporate distress, which could translate into firm closures and bankruptcies, labor market and banking system strains.

‘Given these uncertainties, flexibly adjusting the size and composition of the policy support will be important. Fiscal policy should play a larger role in the policy mix.

‘This year, the fiscal deficit is expected to widen due to a decline in revenues and higher cash transfers and capital spending. Fiscal support should be maintained in 2021, with improving efficiency in execution as priority. Over the medium-term, the emphasis should be on mobilizing revenue for financing green and productive infrastructure, strengthening social protection systems, and safeguarding debt sustainability.

‘Monetary policy should remain supportive…