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Official Gazette

Tuesday, September 22, 2020

International Monetary Fund suggests measures to help the economy back on track

Updated: 16:22’ - 23/08/2013

Vietnam regained macro-economic stability over the past year, but the economy faced potential risks in the coming months, according to a recent report of the International Monetary Fund (IMF).

The export sector is performing well, especially foreign-invested enterprises, while domestic companies, though improving, have yet to find a solid footing.

Problems facing the domestic sector include low productivity, improper allocation of resources, impaired bank balance sheets and inefficiency in some state-owned enterprises (SOEs).

The IMF Executive Board said Vietnamese authorities had made significant progress in macro-economic stabilization but vulnerabilities in the banking sector still exist and SOE reforms should be further stepped up.

 “The financial and SOE sectors remain key sources of vulnerability,” the board said. “As a result of past policies, part of the banking system is under-capitalized, under-provisioned and has low profitability.”

It noted that data limitations and challenges in the regulatory and supervisory framework hampered an understanding of the true state of the financial system. SOEs dominated key industries and appeared to have had high profit margins, though their true financial state remained publicly unknown.

IMF executive directors suggest Vietnam avoid loosening its policy stance and accelerate structural reforms.

Measures should be put in place to recapitalize banks, strengthen banking supervision and deal with non-performing loans. Strengthening credit risk governance by promoting greater transparency should be a top priority.

The directors emphasized that the establishment of a high-level steering committee would be critical to fostering SOE restructuring.-

VNL_KH1 

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