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Business and Economics > Finance: General

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Cover Technical Assistance Reports
Vietnam: Technical Assistance Report-Financial Soundness Indicators Mission (April 3–7, 2023)
International Monetary Fund. Statistics Dept.
The mission worked with officials of the Macroprudential Supervision Department (MSD) of the State Bank of Vietnam (CBS) to enhance the compilation and reporting of financial soundness indicators (FSIs) for deposit takers (DTs). The mission reviewed source data, prepared new spreadsheets, and implemented updated FSIs report forms in line with the 2019 FSIs Compilation Guide. The mission also discussed the potential for compiling FSIs for the rapidly growing insurance sector in Vietnam. Alongside these improvements, the SBV will be able to produce updated and improved FSIs for financial sector surveillance.
Keywords:
Vietnam; Financial Soundness Indicators; 2019 FSIs Compilation Guide; deposit takers; insurance corporations.; bank Supervisory Agency; FSIs Guide; IMF's Statistics Department; G. FSIs data; Vietnam development bank; E. FSIs compilation framework; Financial statements; Commercial banks; Insurance companies; Income
Cover IMF Staff Country Reports
Vietnam: Selected Issues
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper overviews the different tools employed by the State Bank of Vietnam (SBV) and empirically analyzes the monetary policy transmission mechanism, comparing the effects from different SBV rate shocks. The results presented in this chapter indicate that the monetary policy’s interest rate channel affects main financial variables, but there are other factors in the transmission that curtail its effectiveness. In contrast, the transmission to inflation or industrial production is found to be generally weak, with only the combined repo/SBV bill rates generating a statistically significant effect. These findings stress the importance of modernizing SBV’s monetary policy framework to strengthen its transmission mechanism and better achieve its goals. Most central banks usually have one main policy rate employed to achieve one main objective and conduct open market operations to make the policy rate effective throughout the economy. Achieving this, along with a clear communication strategy that it is easy to understand would supply the SBV with a stronger monetary policy framework and greater ability to weather future eventual shocks.
Keywords:
sovereign bond market; Vietnam's government bond bond market; government bond market; Policy trade-off; market size; Sovereign bonds; Currency markets; Central bank policy rate; Securities markets; Inflation; Global; Southeast Asia
Cover IMF Staff Country Reports
Vietnam: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Vietnam
International Monetary Fund. Asia and Pacific Dept
The 2024 Article IV Consultation discusses that in the challenging year of 2023, the Vietnamese economy grew by 5 percent thanks to determined actions by the government. The economy was hit by turbulence in the real estate sector, financial distress, and a significant drop in exports. Economic growth is projected to recover to 6.1 percent in 2024, supported by continued strong external demand, resilient foreign direct investment, and accommodative policies. Domestic demand growth is expected to recover gradually as corporates navigate through high debt levels while the real estate sector will only fully recover over the medium term. Inflation is expected to hover around the State Bank of Vietnam’s target of 4–4.5 percent in the year of 2024. The fiscal stimulus is helping sustain domestic demand, including investment, which facilitates private sector deleveraging. However, fiscal support may need to be scaled down if there was a large inflation surprise. An upgraded fiscal framework would help improve public policies and manage challenges ahead. Sustaining high medium-term economic growth, amidst demographic and climate headwinds, requires broader structural reforms to boost productivity, address climate challenges, and strengthen governance.
Keywords:
USD trading band; IMF-World Bank Financial Sector Assessment Program; authorities of Viet Nam; SBV management; IMF's Institute for Capacity Development; Anti-money laundering and combating the financing of terrorism (AML/CFT); Credit; Inflation; Financial sector stability; Global
Cover IMF Working Papers
Rising Temperature, Nuanced Effects: Evidence from Seasonal and Sectoral Data
Ha Nguyen
and
Samuel Pienknagura
Using quarterly temperature and sectoral value-added data for a large sample of advanced economies (AEs) and emerging markets and developing economies (EMDEs), this paper uncovers nuanced effects of temperature on economic activity. For EMDEs, hotter spring and summer temperatures reduce growth in real value-added of manufacturing, and most significantly, of agriculture, while a warmer winter boosts it. For advanced countries (AEs), a hotter spring hurts growth in real value-added of all considered sectors: services, manufacturing and agriculture. For both country groups, the negative effect of a hotter spring is larger and more persistent than the positive effect of a warmer winter. Furthermore, the adverse impacts of hotter temperatures in advanced economies have accentuated in recent decades. This result suggests increased vulnerability to rising temperatures.
Keywords:
climate change; temperature; economic growth; agriculture; summer temperature; emerging markets and developing economies; IMF working paper 24/202; quarterly temperature; seasonal temperature; Agricultural sector; Manufacturing; Emerging and frontier financial markets; Global
Cover IMF Working Papers
Assessing Macrofinancial Risks from Crypto Assets
Ms. Burcu Hacibedel
and
Hector Perez-Saiz
Failures in the crypto space—including the fall of Terra USD and the FTX debacle—have sparked calls for strengthening countries’ policy frameworks for crypto assets, including by enhanced regulation and supervision. How have these heightened concerns about crypto assets been picked up in systemic risk assessment, and what can be done going forward? In this paper, we introduce a conceptual macrofinancial framework to understand and track systemic risks stemming from crypto assets. Specifically, we propose a country-level Crypto-Risk Assessment Matrix (C-RAM) to summarize the main vulnerabilities, useful indicators, potential triggers and potential policy responses related to the crypto sector. We also discuss how experts and officials can weave in specific vulnerabilities stemming from crypto asset activity into their assessment of systemic risk, and how they can provide policy advice and take action to help contain systemic risks when needed.
Keywords:
Crypto assets; vulnerabilities; systemic risk; macrofinancial; analyzing Macrofinancial risk; macro-prudential risk; country-level Crypto-Risk Assessment Matrix; micro-prudential risk; price fluctuation; Virtual currencies; Financial sector; Currencies; Credit risk; Blockchain and DLT; Global
Cover IMF Staff Country Reports
Vietnam: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Vietnam
International Monetary Fund. Asia and Pacific Dept
The 2023 Article IV Consultation discusses that Vietnam experienced a robust post-pandemic economic recovery in 2022 thanks to strong economic fundamentals and prudent public health management during the pandemic. In addition, amidst high private debt and rising global interest rates, a liquidity crunch distressed highly leveraged sectors (in particular, real estate), the corporate bond came to a halt, and nonperforming loans rose. As a result, economic activity decelerated sharply in the first half of 2023. While the government managed to stabilize the markets, risks remain elevated. The report recommends addressing the multiple headwinds affecting the economy calls for a comprehensive, multi-pronged response by the government. In addition, Vietnam should implement far-reaching reforms to meet its ambitious medium- and long-term objectives of sustained high and green economic growth. In addition, achieving the ambitious medium-term growth and climate goals will require accelerating reforms to improve the business environment, critical infrastructure, and human capital.
Keywords:
State budget; policy buffer; U.S. dollar; monetary policy decision-making process; USD trading band; Corporate bonds; Securities markets; Global
Cover IMF Staff Country Reports
Vietnam: 2022 Article IV Consultation-Press Release; Staff Report, and Statement by the Executive Director for Vietnam
International Monetary Fund. Asia and Pacific Dept
This 2022 Article IV Consultation discusses that Vietnam entered the pandemic with robust economic growth and sound fundamentals. Prudent policies resulted in a prolonged period of high growth, price stability, and low public debt ratios. Strong foreign direct investments and trade flows boosted external buffers while banks entered the pandemic in a relatively strong position. The government’s new support package presents an opportunity to entrench the recovery, mitigate the scars of the pandemic, and deliver sustained and inclusive growth. In view of the strong but uneven recovery and heightened uncertainty, policymaking should be agile, and the size and composition of policy support calibrated to the pace of the recovery and downside risks. The report suggests that monetary policy should be increasingly focused on rising inflationary risks, while allowing for greater exchange rate flexibility. Reforms to modernize the monetary policy framework should continue. In order to bolster long-term growth and convergence, the authorities should decisively tackle pervasive economic dualism and boost productivity, focusing on improving the business environment, strengthening governance, reducing corruption, alleviating labor skill mismatches, and improving labor force quality.
Keywords:
monetary policy mix; prudent fiscal policy; government financing datum; U.S. dollar; fiscal policy stance; Credit; External sector statistics; Inflation; Global; COVID-19
Cover IMF Working Papers
Opening Up: Capital Flows and Financial Sector Dynamics in Low-Income Developing Countries
Sebastian Horn
and
Mr. Futoshi Narita
Over the past two decades, many low-income developing countries have substantially increased openness towards external financing and have received large capital inflows. Using bank-level micro data, this paper finds that capital inflows have been associated with financial deepening through increases in bank loans, deposits, and wholesale funding. Domestic banks increase loans more than foreign banks. There are only modest signs of a build-up in financial vulnerabilities. Causality is examined through an instrumental variable approach and an augmented inverse-probability weighting estimator. These approaches indicate only limited evidence for global push effects, pointing towards the importance of domestic pull factors.
Keywords:
micro data; low-income developing countries; U.K.'s Foreign; Commonwealth and Development Office; research project; bank characteristic; Capital inflows; Capital flows; Loans; Financial statistics; Financial sector risk; Global
Cover IMF Working Papers
Corporate Vulnerabilities in Vietnam and Implications of COVID-19
Anh Thi Ngoc Nguyen
and
Ms. Yuanyan S Zhang
The paper uses firm-level data to assess the financial health of the Vietnamese non-financial corporate sector on the eve of pandemic. Our analysis finds that smaller domestic firms were particularly vulnerable even by regional comparison. A sensitivity analysis suggests that the COVID-19 shock will have a substantial impact on firms’ profitability, liquidity and even solvency, particularly in the hardest hit sectors that are dominated by SMEs and account for a sizeable employment share, but large firms are not immune to the crisis. Risks of default can propagate more broadly through upstream and downstream linkages to industries not directly impacted, with stresses potentially translating into an increase in corporate bankruptcies and bank fragility. Policy measures taken in the immediate aftermath of the crisis have helped alleviate liquidity pressures, but the nature of policy support may have to pivot to support the recovery.
Keywords:
Corporate Vulnerability; Debt at risk; ASEAN; Leverage; Profitability; WP; liquidity constraint; solvency condition; FDI firm; balance sheet condition; credit access; COVID-19; enterprise survey; interest payment obligation; service sector firm; Liquidity; Currencies; Financial statements; Services sector; Global
Cover Regional Economic Outlook, October 2020, Asia and Pacific
Regional Economic Outlook, October 2020, Asia and Pacific
Navigating the Pandemic: A Multispeed Recovery in Asia
International Monetary Fund. Asia and Pacific Dept

Abstract

The coronavirus disease (COVID-19) pandemic is still unfolding around the globe. In Asia, as elsewhere, the virus has ebbed in some countries but surged in others. The global economy is beginning to recover after a sharp contraction in the second quarter of 2020, as nationwide lockdowns are lifted and replaced with more targeted containment measures.

Keywords:
recovery; reopening; inequality; job loss; uncertainty; risk; lockdowns; exit strategy; REO; containment measure; virus containment; virus transmission rate; disproportionate impact; labor market survey