Such conclusions were announced by the International Monetary Fund (IMF) delegation upon completion of its working visit to Vietnam on June 25. IMF officials went on to praise the stable economic growth and the continued success in poverty reduction of Vietnam.

They said that stable growth is due to the heightened export volume and great demand in the local market. Inflation is not a major concern as increased trade deficit has been compensated by official development assistance (ODA) sources and foreign direct investment. The State Budget balanced well last year thanks to the growth of import/export taxes and control over spending. The target for budget deficit this year could be attained despite reduced budget revenue after falls in the price of crude oil. With such factors holding influence, budget spending must be closely monitored.

During the June 2-18 tour, the IMF delegation visited Hanoi and HCM City to evaluate development and discuss economic policies with the Government. The visit is part of the regular dialogue process between IMF and its members. The delegation also worked with SBV officials, the ministries of Finance, Trade and Planning and Investment as well as State-owned and private enterprises, financial institutions and representatives from the donor community. 

Challenges for sustainable growth

The delegation highlighted the challenges facing Vietnam’s sustainable development such as maintaining a strong budget for the mid-term while ensuring sufficient assistance sources for development requirements. Further challenges include ensuring public investment resources are allocated effectively via accurate evaluation of projects in the budget system and organizations outside the system such as the Development and Investments Assistance Fund, ensuring that decision making has a firm commercial foundation in the State-owned and banking sectors. The IMF’s lending mechanism for promotion of growth and poverty reduction, which started in 2001, has been supporting reform in those sectors.

The delegation met with Vietnamese officials to discuss growth and the poverty reduction programme. They said that financial assistance of about US$158mil has been disbursed under the framework of the $368mil programme. The subsequent disbursement phase will deliver around $525mil, with funds meted out by the year’s end.

IMF Executive Directorate will evaluate its policy dialogue with Vietnam and round off consultancy in September 2003.