Journal Issue

Vietnam: Staff Report for the 2014 Article IV Consultation—Informational Annex

International Monetary Fund. Asia and Pacific Dept
Published Date:
October 2014
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Fund Relations

(As of May 31, 2014)

Membership Status

Joined: September 21, 1956; Article VIII

General Resources Account

SDR MillionPercent of Quota
Fund holdings of currency460.70100.00
Reserve position in Fund0.010.00

SDR Department

SDR MillionPercent Allocation
Net cumulative allocation314.79100.00

Outstanding Purchases and Loans: None

Latest Financial Arrangements

In millions of SDRs (mm/dd/yyyy)

TypeDate of

Expiration DateAmount



Formally PRGF.

Formally PRGF.

Projected Payments to Fund

In millions of SDRs (based on existing use of resources and present holdings of SDRs)


Exchange Arrangement

The exchange rate arrangement is classified as “stabilized.” The de jure arrangement is managed floating. The State Bank of Vietnam (SBV) announced a 1 percent devaluation of the dong (VND) on June 18, 2014 and maintained the trading band at ±1 percent.

Vietnam maintains an exchange system free of restrictions on the making of payments and transfers for current international transactions, except for those exchange restrictions imposed for security reasons of which Vietnam has notified the IMF pursuant to Executive Board Decision No. 144-(52/51), 8/14/52.

Article IV Consultations

Vietnam is on a 12-month consultation cycle. The last Article IV consultation was held in Hanoi during April 8–25, 2013, and was concluded by the Executive Board on June 24, 2013 (Public Information Notice No. 13/304).

Technical Assistance

In recent years, Vietnam has received extensive technical assistance (TA) in the areas of tax policy and administration, public financial management, statistics (government finance, external sector, price, and national accounts), financial soundness indicators, stress testing the banking sector, and monetary operations and liquidity management. From December 2008 to January 2012, a resident advisor assisted the authorities in improving banking supervision. The IMF-World Bank Financial Sector Assessment Program was undertaken during 2012–13.

Resident Representative

Mr. Sanjay Kalra is the Resident Representative for Vietnam and Lao P.D.R., based in Hanoi.

Relations and Collaboration with the World Bank Group1

(As of June 18, 2014)

Partnership in Vietnam’s Development Strategy

The World Bank Country Partnership Strategy (CPS) for Vietnam was presented to the Board of Directors in December 2011. The CPS is aligned with Vietnam’s Socio-Economic Development Strategy (SEDS) 2011–15 and sets out the World Bank’s planned support for Vietnam between FY12 and FY16. The CPS program supports investments and policies organized into a strategic framework of three pillars and three cross-cutting themes. The pillars are: (i) strengthening Vietnam’s competitiveness in the regional and global economy, (ii) increasing the sustainability of its development, and (iii) broadening access to opportunity. Key cross-cutting themes are: (i) strengthening governance; (ii) supporting gender equity; and (iii) improving resilience in the face of external economic shocks, natural hazards, and the impact of climate change.

An underlying theme in the CPS is the importance of building on the country’s strong track record of growth and poverty reduction to partner with Vietnam in its effort to achieve success as a middle-income country (MIC). The CPS program supports reforms for Vietnam’s multiple transitions, notably, from an agrarian economy toward one that is more urban and industrialized; from a focus on quantity toward a greater focus on quality of production and service provision; and from a factor driven to an efficiency driven economy.

World Bank Group Strategy and Lending

The World Bank Group uses a broad range of instruments including development policy loans, program for results (PforR) and investment operations, and analytical and advisory activities; the IFC’s equity, loan, and technical assistance (TA) participations and the Mekong Private Sector Development Facility (MPDF); Multilateral Investment Guarantee Agency (MIGA) activities; and donor partnerships and ODA coordination.

Scale of the World Bank Group program: The WB Portfolio is large, with a significant IDA16 Allocation amounting to US$4.37 billion. The program has grown and diversified over the past several years. As of June 9, 2014, the portfolio consisted of 50 IDA/IBRD operations and six standalone Global Environment Facility (GEF), Chlorofluorocarbon (CFC), and large Recipient Executed Trust Funds (RETF) projects, with the total net commitments of US$9.7 billion. Vietnam became an IDA/IBRD blend country in FY10. So far, IBRD resources of US$1.9 billion have been used to finance two DPO series, an expressway, a transmission and distribution project, and a hydro-power project.

International Finance Corporation (IFC) commitments totaled US$2,597 million over the five-year period of FY11–FY13, including mobilization through its asset management business and commercial banks, and commitments for FY14 is expected to surpass US$1 billion.

Lending program: The World Bank has a diverse lending program supporting infrastructure, rural development, human resources, and improvement in economic and financial sector management. Support to infrastructure includes energy supply and distribution, rural and national road development, water and wastewater treatment, irrigation systems rehabilitation, and natural resources management. For rural water and sanitation, the first PforR operation was approved in support of Vietnam’s National Targeted Program in FY13. A second PforR was approved by the Board for National Urban Program in early June this year. The program also supports development of health systems to ensure increased access to quality health services and education quality improvements. Key elements of economic management support include a multi-year development policy loan linked to reforms on economic management and competitiveness, tax system reform, and development and modernization of public financial management and financial systems.

Knowledge program: The World Bank supports the government’s efforts to strengthen institutional capacity through its extensive knowledge program of analytical and advisory services. While financing is still an important part of the partnership between the Vietnamese government and the World Bank, Vietnam’s new status as a MIC highlights the important role the Bank can and does play in generating knowledge and sharing global experiences and best practice. The annual Vietnam Development Reports (VDRs) summarize the accumulated knowledge in a specific policy area of Vietnam’s reform agenda. Recent VDRs have focused on thematic areas such as skills development, Vietnam’s transition to a market economy, natural resource management, and modern institutions. The 2015 VDR will focus on long-term growth and competitiveness.

Other reports during this period have included a Fiscal Transparency Review, a Poverty Assessment, a report on Trade Facilitation, Value Creation, and Competitiveness, and an Urbanization Review. Forthcoming reports cover the topics of Fiscal Decentralization, Public Expenditure Review, and Conflict of Interest. In addition, the World Bank continues to provide technical assistance in areas such as governance, social protection, renewable energy, climate change adaptation, financial sector reform, and public financial management reform.

IMF-World Bank Collaboration in Vietnam

Specific Areas: Since the expiration of the PRGF in April 2004, the two institutions have closely collaborated on monitoring the macroeconomic situation, and in discussions of PRSC triggers and benchmarks in the policy areas that used to be covered by the PRGF agreement. The IMF has provided assessment letters in support of PRSC and EMCC operations. In the area of public financial management, the World Bank recently closed an investment credit to support the introduction of a modern Treasury and Budget Management Information System, and a large multi-donor trust fund to provide technical advice for public financial management reform. It also has an investment loan for Tax Administration Modernization. The World Bank is preparing a Programmatic Public Finance Review (PPFR), and collaborates closely on this with the IMF. There is close cooperation between the IMF’s Regional PFM Advisor and the Bank team in Hanoi.

In recent years, joint work has been carried out to support the establishment of a modern central bank, with the IMF providing TA on monetary policy and operations, and both the World Bank and IMF providing TA on banking supervision. The World Bank has also set up investment credits to support development of an integrated system of advanced business processes and modern information technology at the SBV (including for the Deposit Insurance Agency and Credit Information Center) to improve its capacity to make more informed and timely policy decisions. The IMF and World Bank conducted Vietnam’s first joint Financial Sector Assessment Program (FSAP) during 2012–13. Since 2005, the World Bank and the IMF have jointly prepared an annual Debt Sustainability Assessment. The Asian Development Bank has joined since 2009. Training to the authorities on debt management is ongoing. There has been close coordination with the Fiscal Affairs Department on tax policy and administration issues, including the recent amendments to the Laws on Corporate Income Tax and Value Added Tax. The IMF and the World Bank also collaborate in the development and timely dissemination of reliable economic and financial statistics. The IMF focuses on improving balance of payments, national accounts, price, and government finance statistics, while the World Bank provides assistance on issues related to the production of high-quality household and enterprise surveys and facilitate the implementation of National Gender Indicators System. The two institutions consult during Article IV consultations in order to share information and help coordinate policies.

World Bank Lending Program for FY12-14

(As of December 1, 2013)

IDA16 Vietnam Allocation in SDRs2,759.0
Vietnam OperationIBRD $mIDA $mTotal (IBRD+IDA)
1Third Rural Transport Project - Additional Financing97.097.0
2Medium Cities Development Project210.0210.0
3Vietnam Poverty Reduction Support Credit 10150.0150.0
4Vietnam Climate Change Development Policy70.070.0
5Mekong Delta Region Urban Upgrading Project292.0292.0
6Forest Sector Development Project - Additional Financing30.030.0
7Vietnam Power Sector Reform DPO2100.0100.0200.0
8Coastal Resources for Sustainable Development Project100.0100.0
Total FY12 Projects100.01,049.01,149.0
1Vietnam - Managing Natural Hazards Project150.0150.0
2Distribution Efficiency Project448.9448.9
3Vietnam Climate Change Development Policy 270.070.0
4Vietnam Industrial Pollution Management Project50.050.0
5VN-Rural Sanitation & Water Supply (P4R)200.0200.0
6Mekong Transport Infrastructure Development - AF156.0156.0
7Higher Education Development Policy Program - Third Operation50.050.0
8Vietnam School Readiness Promotion Project100.0100.0
9Economic Management Competitiveness Credit 1 (EMCC1)250.0250.0
10Danang Sustainable City Development Project (SCDP)203.0203.0
11Vietnam Inclusive Innovation Project55.055.0
12North East and Red River Delta Regional Health System Support Project (NORRED)150.0150.0
13Vietnam Science and Technology Innovation - FIRST (Fostering Innovation through Research, Science and Technology)100.0100.0
Total FY13 Projects1,982.91,982.9
FY14 Plan
1Regional Mekong Water Resources25.025.0
2Vietnam Irrigation Efficiency Project180.0180.0
3VN-Poverty Reduction in Central Highlands150.0150.0
4Power DPO 3200.0200.0
6Vietnam Social Protection System60.060.0
7Vietnam Road Asset Management Project250.0250.0
8Vietnam Health Human Resources Strengthening Project106.0106.0
9Northern Mountainous Urban Development Project PforR250.0250.0
10Climate Change DPO370.070.0
Planned Total FY14 Projects*200.01,341.01,541.0
Total IDA16300.04,372.94,672.9

Regional Mekong Water Resources project will use only $8 million from the country allocation.

Regional Mekong Water Resources project will use only $8 million from the country allocation.

Relations with the Asian Development Bank

(As of July 2014)

The Asian Development Bank (ADB) has been working in partnership with the Government of Vietnam—a 1966 founding member of ADB—since the resumption of operations in 1993.

ADB’s Country Partnership Strategy (CPS), 2012–2015 is fully aligned with the Socio-Economic Development Plan (SEDP), 2011–2015, and supports issues arising from Vietnam’s recent transition to a middle-income country. The CPS focuses ADB assistance to Vietnam through three pillars of inclusive growth, enhancing economic efficiency, and environmental sustainability. To maximize ADB’s development impacts, ADB prioritizes six sectors: (i) agriculture and natural resources; (ii) education; (iii) energy; (iv) finance; (v) transport; and (vi) water supply, and other municipal infrastructure and services. Public sector management is crosscutting and mainstreamed in terms of sector operations through reform and policy-oriented support.

ADB is supporting the implementation of structural reforms that increase competitiveness and assist Vietnam in transitioning to a middle-income country. ADB is engaged in policy dialogue on financial sector and state-owned enterprise (SOE) reforms. To facilitate faster development of infrastructure, ADB is assisting the government to develop a pilot scheme to promote public–private partnerships.

Table 1.Lending (Approved Amount)* and Disbursement by Year, 1993-2013(In millions of U.S.dollars)
Approved Amount1/Disbursement
Ordinary Capital Asian Development
2009 2/1,4035231,9261,093
Source: Asian Development Bank.

Includes loan components of regional projects in Vietnam.

Excludes a guarantee of $325 million for EVN (Loan No. 2604, approved on 12/11/09).

Source: Asian Development Bank.

Includes loan components of regional projects in Vietnam.

Excludes a guarantee of $325 million for EVN (Loan No. 2604, approved on 12/11/09).

Vietnam is one of the largest concessional Asian Development Fund (ADF) recipients, with projected ADF allocation of US$732 million for 2013–14. Ordinary capital resources (OCR) are also actively being used for projects with higher rates of return, such as infrastructure, which had an average allocation of US$835 million during 2009–13 (Table 1).

From October 1993 until December 31, 2013, ADB has provided 133 sovereign loans totaling US$12.5 billion, 280 technical assistance grant projects amounting to US$258.3 million and 31 grant projects totaling US$305 million to Vietnam (Tables 24).

As a catalyst for private investments, ADB also provides direct financial assistance to nonsovereign public sector and private sector projects in the form of direct loans, equity investments, guarantees, B loans, and trade finance. Since its inception to end-2013, ADB has approved a total of US$280 million in non-sovereign financing for Vietnam, all of which was for seven private sector projects. Total outstanding balances and commitments of ADB’s private sector transactions in the country as of December 31, 2013 totaled about US$169.7 million, representing 4.6 percent of ADB’s total nonsovereign portfolio.

ADB’s Trade Finance Program (TFP) fills market gaps in trade finance by providing guarantees and loans through over 200 partner banks in support of trade. The TFP has supported US$16 billion in trade involving almost 6,500 small and medium-sized enterprises. In Vietnam, the TFP works with nine banks and has supported over US$4.7 billion in trade between 3,200 transactions by almost 2,000 small- and medium-sized enterprises. In addition to filling market gaps, the TFP’s objective is to mobilize private sector capital/ involvement in developing Asia. In Vietnam, over 69 percent of the US$3.6 billion in trade supported through the TFP was co-financed by the private sector.

Vietnam also receives substantial support under the Greater Mekong Sub-region initiatives, involving Cambodia, China, Lao P.D.R., Myanmar, Thailand, and Vietnam.

As part of its regular operations, ADB coordinates closely with Vietnam’s development partners to improve the effectiveness, efficiency, and impact of its lending and non lending programs. ADB also works closely with civil society organizations and the private sector in Vietnam to mobilize financial resources and expertise from other partners. ADB is an active member of the Aid Effectiveness Forum and the Six Banks Initiative—comprising ADB, Agence Française de Développement (AFD), KfW, Japan International Cooperation Agency, Export Import Bank of Korea, and the World Bank.

Co-financing operations enable ADB’s financing partners, governments or their agencies, multilateral financing institutions, and commercial organizations, to participate in the financing of ADB projects. The additional funds are provided in the form of official loans and grants, and commercial financing, such as B loans, risk transfer arrangements, parallel loans, and co-financing for transactions under ADB’s TFP. As of December 31, 2013, cumulative direct value-added official co-financing for Vietnam amounted to US$3.65 billion for 46 investment projects and US$95.6 million for 76 co-financing technical assistance projects.

The ADB and IMF staffs coordinate through ad hoc information exchange information on policy matters.

Table 2.Technical Assistance by Sector, December 2013
SectorNumber of ProjectsIn millions of U.S. DollarsIn Percent of Total
Agriculture and Natural Resources49.048.418.7
Health and Social Protection14.06.92.7
Industry and Trade8.012.64.9
Public Sector Management62.039.615.3
Transport and ICT31.060.323.4
Water and Other Municipal Infrastructure and Services25.023.39.0
Source: Asian Development Bank.
Source: Asian Development Bank.
Table 3.Loans by Sector, December 2013
SectorNumber of LoansIn Millions of U.S. DollarsIn Percent of Total
Agriculture and natural resources27.01,660.213.3
Health and social protection8.0343.22.7
Industry and trade5.0109.50.9
Public sector management13.01,029.18.2
Transport and ICT24.04,145.733.2
Water and other municipal infrastructure and services13.01,119.29.0
Source: Asian Development Bank.
Source: Asian Development Bank.
Table 4.Grants by Sector, December 2013
SectorNumber of GrantsIn Millions of U.S. DollarsIn Percent of Total
Agriculture and natural resources10.053.617.6
Transport and ICT4.0172.056.4
Water and other municipal infrastructure and services3.04.01.3
Source: Asian Development Bank.
Source: Asian Development Bank.

Statistical Issues

(As of May 6, 2014)

Assessment of Data Adequacy for Surveillance

General: Data provision has some shortcomings, but is broadly adequate for surveillance. Most affected areas are: financial sector, national accounts, government finance, and external sector statistics.

National accounts: The General Statistics Office (GSO) provides quarterly (cumulative) and annual data on GDP by type of economic activity and annual data by expenditure (both in current and constant prices), and monthly and annual data on external trade, industrial output, retail sales, and prices. The GSO recently rebased the national accounts to 2010 as the base year from 1994. While the national accounts methodologies are broadly consistent with the SNA93, the data collection practices and coordination between data collection agencies could be strengthened. A recent National Accounts technical assistance mission made the following recommendations: (i) adoption of labor input methods to improve the coverage of the nonobserved economy, (ii) estimation of capital stock, consumption of fixed capital and change in inventories, (iii) allocation of financial intermediation services indirectly measured (FISIM), (iv) expansion of production and asset boundaries according to 1993/2008 SNA, (v) use of the supply-use framework to ensure consistency between production and expenditure GDP data, and (vi) the use of double deflation methods for constant price estimates.

Prices statistics: The CPI methodology is largely in line with international standards. However, there is only a notional inclusion of owner-occupied and rental housing. Also, there is a need to adopt a geometric mean of price relatives at the lower level of aggregation, instead of the upward biased arithmetic mean. Trade price indices are also compiled, but not used in the national accounts. The GSO has developed a work program with assistance of Fund TA to improve the accuracy of the consumer, producer and trade price indices, and is working toward the development of construction and services price indices.

Government finance statistics: Government operations data reflect the consolidated operations of the state budget, which cover all four levels of government (central, provincial, district, and commune). However, data exclude quasi fiscal activities of the central bank (and state-owned enterprises (SOEs)), and extra-budgetary funds, among which are the Social Security Fund, Enterprise Restructuring Fund, Development Assistance Fund, Export Support Fund, local development funds, and the Sinking Fund (for repayment of on-lent funds), for which data are not compiled/disseminated on a regular basis. Compilation is on a cash basis for final annual data, but varies for provisional data depending on their source. As a result, government financing data, in particular domestic bank financing, cannot be reconciled as reported in the fiscal and monetary accounts. The World Bank and the IMF have recommended improving the coverage of fiscal data and aligning definitions with the GFSM 2001. Vietnam tentatively confirmed participation in the three-year GFS technical assistance (TA) project for Asia and Pacific Island countries, funded by the Japanese government. Participation in this project, launched recently by STA, could enhance further the quality of fiscal data.

Monetary statistics: The IMF’s Statistics Department (STA) has encouraged the State Bank of Vietnam (SBV) to develop a reporting scheme for a comprehensive break-down of banks’ credit to the economy by borrowing sectors and subsectors. In addition, STA has recommended that: (a) a list of SOEs that have been privatized and, therefore, should be classified as private enterprises should be distributed to banks in order to guide their data reporting on enterprises; (b) funds for on-lending should be reclassified out of banks’ “unclassified liabilities” to “other deposits.”

External sector statistics: Balance of payments statistics rely on limited source data, resulting in gaps in several areas of the external accounts (current, capital, and financial). The authorities are working on improving data on tourism revenue (travel) and workers’ remittances, supported by IMF’s STA TA. STA technical assistance missions have made the following observations and recommendations: (i) the available resources are not sufficient to ensure effective implementation of an International Transaction Reporting System; (ii) further improvements are still needed in the treatment of goods for processing in line with BPM6, improvement of remittances estimates, and further study on unrecorded trade in gold; (iii) to establish a uniform concept of direct investment (DI) in the national legislation and develop a reliable data source on DI stocks (at present DI data are based on regulatory approvals) given that it is an important component of the International Investment Position; (iv) address significant errors and omissions in the balance of payments, which could be related to underestimation of DI flows and estimates of changes in household holdings of foreign exchange in cash; (v) international reserves transactions need to be distinguished from valuation changes; (vi) dissemination of external sector statistics, in line with internationally accepted practices.

Financial sector statistics: The availability of data on the financial sector is very limited, and the quality of data requires substantial improvement, even on key financial soundness indicators.

Data Standards and Quality

Vietnam is a participant in the General Data Dissemination System (GDDS) since September 2003. In conjunction with the authorities, staff from STA have developed a roadmap for Vietnam’s eventual subscription to the Special Data Dissemination Standard (SDDS).

No data ROSC are available.

Reporting to STA

Currently, no government finance statistics (GFS) are reported for publication in the IMF’s Government Finance Statistics Yearbook (GSY) or International Financial Statistics (IFS). Annual GFS data through 2004, excluding extra-budgetary funds and social security funds, based on the 1986 GFS format, have been reported for publication in the GFSY. No sub-annual fiscal data have been reported for publication in IFS since 2001.

Table of Common Indicators Required for Surveillance(As of May 6, 2014)
Date of Latest ObservationDate ReceivedFrequency of Data1Frequency of Reporting1Frequency of Publication1
Exchange RatesMay 20145/6/14DIW
International Reserve Assets and Reserve Liabilities of the Monetary Authorities2Feb. 20145/6/14MMN/A
Reserve/Base MoneyJan. 20144/3/14MIN/A
Broad MoneyJan. 20144/3/14MIN/A
Central Bank Balance SheetJan. 20144/3/14MIN/A
Consolidated Balance Sheet of the Banking SystemJan. 20144/3/14MIN/A
Interest Rates3Oct. 20131/15/14MIN/A
Consumer Price IndexApr. 20144/24/14MMM
Revenue, Expenditure, Balance and Composition of Financing4—General Government5N/A
Revenue, Expenditure, Balance and Composition of Financing4—Central GovernmentApr. 2014Apr. 2014QQQ
Stocks of Central Government and Central Government-Guaranteed Debt6Dec. 2013Mar. 2014AAA
External Current Account BalanceQ4 20134/15/14QQQ
Exports and Imports of Goods and Services7Mar. 20144/7/14MMM
GDP/GNPQ1 20143/25/14QQQ
Gross External Debt2013Mar. 2014AAA
International Investment Position8N/AN/AN/A

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I); and Not Available (N/A).

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency, but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra-budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Services data available on an annual basis.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I); and Not Available (N/A).

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency, but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra-budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Services data available on an annual basis.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Questions may be referred to Ms. Williams (202-473-6997).

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