Vietnam
2001 Article IV Consultation and First Review Under the Poverty Reduction and Growth Facility and Request for Waiver and Modification of Performance Criteria—Staff Report; Staff Statement; Public Information Notice; News Brief; and Statement by the Executive Director for Vietnam
Author: International Monetary Fund
Publication Date:
09 Jan 2002
eISBN:
9781451840186
Language:
English
Keywords:
ISCR; CR; state-owned commercial banks; guideline; growth; authority; NPL resolution; SOE reform; debt monitoring; state enterprise; private sector; debt management
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This paper assesses Vietnam’s 2001 Article IV Consultation, First Review Under the Poverty Reduction and Growth Facility (PRGF), and a Request for Waiver and Modification of Performance Criteria. Economic performance has been positive so far in 2001, under the first-year PRGF-supported program. Despite slowing exports, real GDP growth has been relatively robust, inflation subdued, and the external position has strengthened. All but two of the end-June quantitative benchmarks and performance criteria were observed. The authorities are taking corrective steps and pursuing a policy agenda aimed at sustaining growth and protecting macroeconomic stability.

Abstract

This paper assesses Vietnam’s 2001 Article IV Consultation, First Review Under the Poverty Reduction and Growth Facility (PRGF), and a Request for Waiver and Modification of Performance Criteria. Economic performance has been positive so far in 2001, under the first-year PRGF-supported program. Despite slowing exports, real GDP growth has been relatively robust, inflation subdued, and the external position has strengthened. All but two of the end-June quantitative benchmarks and performance criteria were observed. The authorities are taking corrective steps and pursuing a policy agenda aimed at sustaining growth and protecting macroeconomic stability.

I. Introduction

1. In the attached letter dated November 7, 2001, together with the Supplementary Memorandum of Economic and Financial Policies (MEFP) (Attachment I), the government of Vietnam requests completion of the first PRGF review, waivers for the nonobservance of two quantitative performance criteria for end-June and one structural performance criterion for end-September, and modification of one performance criterion for end-December 2001. In support of these requests, the Supplementary MEFP reviews progress made so far under the first-year PRGF program and sets out the policies to be implemented in the remainder of the first year through June 2002. A second disbursement (SDR 41.4 million) is conditioned on the completion of the first review and compliance with end-June quantitative performance criteria and with the end-September structural performance criterion.1 Vietnam’s reform effort is also being supported by the World Bank’s Poverty Reduction Support Credit (PRSC), in an amount of US$250 million, approved in June 2001 (Annex II). The Interim Poverty Reduction Strategy Paper (EBD/01/32) underpins Vietnam’s economic program for both the PRGF and the PRSC credits.

II. Performance under the program in 2001

2. The PRGF-supported program is aimed at restoring Vietnam’s growth closer to potential and reducing poverty, through boosting private investment and competitiveness of the economy. Along the lines endorsed by Executive Directors in concluding the 2000 Article IV consultation, key program elements include the maintenance of macroeconomic stability, accelerated reforms of state-owned commercial banks (SOCBs) and enterprises (SOEs), the promotion of private sector development, and liberalization of the exchange and trade regimes.

3. Macroeconomic objectives for 2001 under the first-year program included achieving a real GDP growth of at least 5 percent and keeping inflation under 5 percent (Table 2). Despite an envisaged weakening in global demand, the external current account was targeted to be in balance and gross reserves to rise to US$3.6 billion (or 8 ¼ weeks of next year’s imports) at year-end.

Table 1

Vietnam: Fund Position and Indicators of Fund Credit, 2000–04

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Sources: International Monetary Fund, Treasurer’s Department; and staff projections.
Table 2

Vietnam: Selected Economic Indicators, 1996–2002

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Sources: Data provided by the authorities: and staff estimates and projections.

Performance as of August 2001, unless otherwise indicated.

Annual data are year-on-year changes in the gross value of industrial output; monthly data are changes since the beginning of the year compared with the same period in the previous year.

Cash basis.

Peformance in the first half of 2001 on an annualized basis.

Figures for 2000 and 2001 based on expanded monetary survey (State Bank of Vietnam (SBV) and 89 credit institutions); for previous periods, based on original monetary survey (SBV and 28 credit institutions).

August 2001.

September 2001.

Monthly data are changes since the beginning of the year compared with the same period in the previous year.

For monthly data, rate of growth based on imports c.i.f; otherwise, based or. imports f.o.b.

Preliminary estimate as of October 26, 2001.

London Club rescheduling was concluded in early 199S. Restructuring of the Russian debt was concluded in September 2000 on comparable terras to the 1993 Paris Club rescheduling.

Includes the loan component of foreign direct investment and other private sector borrowing, and short-term debt

4. Developments in the first nine months of 2001 were satisfactory and consistent with these objectives. Available key indicators, such as retail sales and industrial production, point to continued growth in real GDP, albeit at a slower pace than the corresponding period in 2000 (Box 1). Activity has been driven by domestic demand, including a pick up in private investment following improved business sentiment. Export growth progressively slowed to 10 percent in the first nine months of 2001, from 25 percent in 2000, with weak performance for manufactured exports and depressed non-oil commodity prices. Owing to falling food prices, inflation was subdued, with core inflation (excluding food) running below 2 percent for the year ending September 2001 (Figure 1). On the external front (Figure 2), with a slowing of imports and a modest strengthening of FDT inflows, gross reserves rose to an estimated US$3.4 billion at end-September.

Figure 1.
Figure 1.

Vietnam: Selected Economic Indicators, 1997-2001

Citation: IMF Staff Country Reports 2002, 004; 10.5089/9781451840186.002.A001

1/ On short-term working captial loans.2/ Measured with respect to nominal interest rate at the end of each month and three-month moving average of year-on-year non-food inflation3/ Estimated for September 2001
Figure 2.
Figure 2.

Vietnam: External Sector Developments, 1994-2001

Citation: IMF Staff Country Reports 2002, 004; 10.5089/9781451840186.002.A001

Sources: Data provided by the Vietnamese authorities; and fund staff estimates.

5. Macroeconomic policies so far in 2001 have been implemented broadly in line with program expectations. All quantitative performance criteria for end-June were met, except for those on bank credit to SOEs and on net international reserves (NIR) (Table 3 and paragraphs 7 and 9 below).

Table 3.

Vietnam: Quantitative Performance Criteria and Benchmarks Under the First-Yeair PRGF Program Through June 2002 1/2/

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Sources: Vietnamese authorities; and staff estimates and projections.

The measurement and reporting requirements of quantitative benchmarks and performence criteria are described in the Annex I (Technical Memorandum of Understanding) of the Supplementary Memorandum on Economic and Financial Policies of the Government of Vietnam fur September 2001-June 2002.

Performance criteria for end-June and end-December 2001; and quantitative benchmarks otherwise, except for (i) credit from the banking system and from the budget and budget Support to 200 targeted large SOEs, which is a quantitative benchmark for end-June 2001 and end December and (ii) external payments arrears, which is a continuous performance criterion through June 2002.

At program monitoring exchange rates.

Excludes non-negotiable government bonds for state-owned commercial bank’s reform.

Ministry of Finance estimate.

Represent outstanding arrears to Algeria; a rescheduling agreements is currently under discussion between the Vietnamese and Algerian authorities.

Actual performance measured on the basis of using program monitoring exchange rates for non U.S. dollar denominated foreign assets and liabilities of the State Bank of Vietnam, as described in Annex I.

ufig01

Vietnam: Real GDP, Exports and FDI, 1995-2004

(annual percentage change, except FDI)

Citation: IMF Staff Country Reports 2002, 004; 10.5089/9781451840186.002.A001

Source: Vietnamese authorities, and Fund staff estimates and projections.1/ From December 2000, based on expanded monetary survey comprising State Bank of Vietnam (SBV) and 89 credit institutions; for previous periods, based on original monetary aavey (SBV end 28 credit institutions).
ufig02

Vietnam: Merchandise Exports, March 1997-September 2001

(3-month total, year-on-year percentage change)

Citation: IMF Staff Country Reports 2002, 004; 10.5089/9781451840186.002.A001

Source: Vietnamese authorities, and Fund staff estimates.
ufig03

Vietnam: Fiscal Developments and Outlook, 1997-2003

(in percent of GDP)

Citation: IMF Staff Country Reports 2002, 004; 10.5089/9781451840186.002.A001

Source: Vietnamese authorities, and Fund staff estimates and projections.1/ Excludes capital costs of reforms.

6. The fiscal stance in the first half of 2001 was less expansionary than envisaged, with the overall deficit (excluding onlending) estimated at 1½ percent of GDP on an annualized basis, compared with 2¾ percent programmed for the year (Table 4). This outcome reflected stronger-than-expected revenue performance, mainly on account of non-oil sources. More specifically, VAT collection was buoyant due to increases in the volume of taxable imports and the expansion of the tax base to capture newly registered enterprises (see paragraph 11). In addition, expenditure was well below budget, particularly for structural reforms and for capital projects, due to the slow pace of implementation; recurrent spending for health and education was broadly on target, at 51 percent of the amount originally budgeted for the year. Domestic financing was avoided and the performance criterion on bank credit to government was observed with a comfortable margin.

Table 4.

Vietnam: Summary of General Government Budgetary Operations, 1998–2002 1/

(In trillions of dong)

Table 4.

Vietnam: Summary of General Government Budgetary Operations, 1998–2002 1/

(In percent of GDP)

Sources: Ministry of Finance, State Budget Department; and staff estimates and projections.

Cash basis.

Domestic nonbank financing is derived as a residual and includes statistical discrepancy.

Includes prospective external budget support for structural reforms.

Self-financed expenditures undertaken by government administrative units, which are excluded from the above budget presentation

Staff estimate based on (i) current social expenditure in the budget on education and training, health, and family planning; (ii) safety net costs of state-owned enterprise reform; (iii) targeted capital spending programs in poverty reduction and employment, clean water and public health, family planning, education and training, and reforestation; and (iv) other capital expenditure on education and training and health, and on poverty-related projects in the agriculture, transportation, and electricity and water sectors.

Vietnam: Growth Performance and Outlook

Real GDP growth under the program is currently projected at 4¾ percent in 2001, compared with 5½ percent in 2000. This is down slightly from the original program projection of 5 percent,1 which already anticipated some weakening in the external environment. Following the September 11 events, a further weakening is likely mainly through a slump in manufactured exports (footwear and garments and electronic goods, which will likely show little growth in 2001) and a temporary dampening of investor sentiment.

The moderation of growth in 2001 reflects several supply side factors. Agricultural production has not beer, as robust as in recent years, which witnessed record harvests. Official estimates put growth in agricultural output at 2¼ percent in the first nine months of 2001, compared with 3¾; percent in the same period last year. Rice output is expected to be 2 percent lower this year, which is being offset by strong growth in non-rice staples and coffee production. Industrial output has been growing at a slightly slower pace than in 2000, but mainly for the domestic market and in part to support construction activity. The service sector, while is still relatively strong, has been affected by the slump in rural incomes—agricultural incomes have suffered owing to low world commodity prices, which for rice and coffee have fallen by an average of 15 and 40 percent, respectively, in the first nine months of 2001 compared with last year. Overall, retail sales growth has fallen by one-half so far this year to 9 percent.

Vietnam: Contribution to Real GDP Growth

(In Percentage points of GDP growth)

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Source: Staff estimates and projections.

Includes changes in inventories.

Includes statistical discrepancy between expenditure- and production-based GDP.

On the demand side, consumption growth has eased in 2001, affected by rural income and evidenced by lower than anticipated growth in imports of finished goods. Investment demand has been buoyed by low interest rates, the creation of a large number of small and medium-sized enterprises, government capital spending, and a rise in FDI. Despite the slowdown in external demand, net export growth is still expected to be only slightly negative in light of sizeable increases in the volume of coffee exports, as well as crude oil and marine products.

Looking ahead to 2002, growth is projected to pick up to 5¼ percent, on the strength of a moderately expansionary fiscal policy, including double-digit growth in public capital investment; a further expansion of private sector activity (see Box 3); and the positive impact of the new bilateral trade agreement with the U.S. Also, FDI flows arc expected to rise substantially in 2002 as new oil and gas projects enter their full implementation phase. Compared with the original program projections, the growth outlook for 2002 has been scaled back (from 6 percent earlier) owing to an anticipated persistence of a weaker and more uncertain external environment well into next year. In particular, non-oil export growth (in U.S. dollar terms) has been reduced from 17 percent to 9 percent—slightly below expected growth in 2001.

Downside risks to the outlook arise from a lengthier and deeper global slump, weaker commodity prices, and an even lower crude oil price (now projected to average US$22 per barrel), which could also affect new investment in the energy sector. While implementation of SOE and trade reforms could have some temporary dislocation, any prolonged slippage in the overall reform agenda will weaken investor confidence as well as prospects for a sustained recovery.

1 The official projection of real GDP growth in 2001 has also been marked down recently by about ½ percentage point to 7 percent.

7. Credit policy has been restrained as programmed, reversing the trend of the last two years. Credit growth slowed from 38 percent at end 2000 to 29 percent by end-June, close to the programmed 28 percent (Table 5 and Figure 3). This deceleration reflected tighter dong liquidity, as well as a firmer policy stance of the State Bank of Vietnam (SBV), especially starting in the second quarter of the year. However, the March benchmarks for net domestic assets (NDA) of the banking system and for bank credit to SOEs were exceeded, on account of subsidized credit through SOEs for crop purchases to support farm prices for coffee and rice.2 To rein in credit and ease the pressure on the exchange rate, during the period May-September, the authorities avoided matching cuts in U.S. interest rates on the domestic base lending rate (following rate cuts totaling 1¼ percentage points early in the year). SBV refinancing was also kept in check. As a result, credit growth moderated and the end-June performance criterion on NDA was met. However, the end-June performance criterion on bank credit to SOEs was missed by D 1.0 trillion (1.3 percent of outstanding SOE bank credit), again owing to financing for crop purchases amounting to D 2.5 trillion.

ufig04

Vietnam: Domestic Credit By Borrower 1/ January 1998–June 2001

(year-on-year percentage change)

Citation: IMF Staff Country Reports 2002, 004; 10.5089/9781451840186.002.A001

Source: Vietnamese authorities, and Fund Staff estimates.1/ From December 2000, based on expanded monetary survey comprising State Bank of Vietnam (SBV) and 89 credit institutions; for previous periods, based on original monetary survey (SBV and 28 credit institutions).
ufig05

Vietnam: Dong Deposit and Lending Rates January 1998 – September 2001

(percentage per year)

Citation: IMF Staff Country Reports 2002, 004; 10.5089/9781451840186.002.A001

Source: Vietnamese authorities, and Fund Staff estimates.
Table 5.

Vietnam: Monetary Survey: December 1999–June 2002 1/2/

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Sources: State Bank of Vietnam; and staff estimates and projections.

Comprising the State Bank of Vietnam (SBV), six state-owned commercial banks, and 83 nonstate-owned credit institutions.

At current exchange rates, unless indicated otherwise.

Excludes foreign currency counterpart of swap operations and of government foreign currency deposits at the SBV.

Excludes foreign currency deposits of DMBs at the SBV. Program targets based on projected foreign currency deposits in the banking system and reserve requirements.

Velocity is measured as the ratio of GDP to end-of-period broad money (M2) or dong liquidity respectively, using Fund staff estimates and projections for nominal GDP.

Money multiplier is measured as the ratio of total liquidity to reserve money.

At program monitoring exchange rates.

Figure 3.
Figure 3.

Vietnam: Monetary and Financial Indicators, 1997–2001

Citation: IMF Staff Country Reports 2002, 004; 10.5089/9781451840186.002.A001

1/ Monetary survey comprising State Bank of Vietnam (SBV), four large state-owned commercial banks, and 24 non-state banks2/ Monetary survey comprising SBV, six large state-owned commercial banks, and 83 non-state banks.3/ Defined as banks’ reserves at the SBV less credit from the SBV.

8. Interest rate policy has been further rationalized. With the introduction of the base rate mechanism in August 2000, the ceilings on dong lending rates were replaced with bands above the base rates of 4 percent for short-term loans and 6½ percent for medium-term loans. Actual rate developments suggest that this mechanism has provided adequate flexibility in the current low inflation and interest rate environment. Also, the cap on foreign currency lending rates was lifted in June 2001, allowing banks to better price risks.

9. Since May 2001, exchange rate management has been more flexible. Official reserves came under pressure in March-April, in the face of depreciating regional currencies, and the March benchmark for NIR of the SBV was missed. Since May, however, the policy stance has been more flexible, so that by end-September, the dong had depreciated against the U.S. dollar from the beginning of the year by a total of 3½ percent (2 percent in real effective terms). Moreover, to boost confidence, the foreign exchange surrender requirement was reduced in May from 50 to 40 percent. With these changes, reserve developments have largely been brought back on track, although the end-June performance criterion for NIR was missed, in large part reflecting a delayed PRSC disbursement.

10. Trade measures have been more ambitious than programmed. In particular, the authorities announced in April 2001 a five-year trade regime, in a break from the past practice of announcing only annual programs (Box 2). The announced timetable for removal of quantitative restrictions (QRs) for five out of eleven items has been advanced significantly. Also in May 2001, QRs on five items were removed ahead of schedule.

11. Recent steps to promote private sector development have also proved effective. Reflecting decisive implementation of the Enterprise Law, which was aimed at easing entry for private businesses (Box 3), the number of small and medium-sized enterprises (SMEs) grew by an estimated 60 percent in the 20 months from end-2000, with total registered capital equivalent to 6 percent of GDP. Also, following amendments of the Foreign Investment Law, FDI is gradually reviving, beginning with large projects in the energy sector and more recently in smaller projects.3

Vietnam: Recent Progress in Trade Reforms

Vietnam has made progress in liberalizing its trade regime since 2000. Under the PRGF-supported program adopted in April 2001, the authorities committed to taking a number of steps to further open Vietnam’s markets. Recent actions indicate that trade liberalization is progressing faster than expected under the program. In particular:

  • The announced timetable for removal of quantitative restrictions (QRs) for three of the six items covered under the PRGF-supported program (steel, vegetable oil, and construction glass) has been advanced by one year to end-2001.

  • Out of the five items remaining subject to QRs after 2003 (and not covered under the PRGF-supported program), the timetable for QR removal on a subset of two items (automobiles and motorcycles) has been advanced to end 2002.

  • Out of eleven items subject to restrictions, QRs on five (alcohol, ceramic and granite tiles, clinker, paper, and 10–16 passenger vans) were removed in May 2001, ahead of schedule.

Vietnam: Schedule for QR Removal, 2001–43

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Source: Prime Minister Decision 46/2001/QD-TTg on the management of import and export of goods in the period 2001-2005.

A Five-Year Import-Export Regime (2001-05) was announced in April 2001. This provides a road map for tariff reduction, QR removal, and other trade measures. Unlike previous years when the trade regime was announced annually, the five-year strategy allows affected traders and enterprises to work in a more predictable and longer-term framework. Under the new regime, and in addition to the above measures:

  • On the export side, traders are free to export a large array of goods, with the exception of (i) certain specified goods (weapons, antiques, drugs, wildlife and scarce species, and wood from natural forests); (ii) goods that are subject to licensing requirements (textiles and garments subject to quotas and goods subject to international treaties between Vietnam and its trading partners); and (iii) items that are subject to special controls (scarce forest plants and certain vegetable and animal species).

  • Quotas on rice exports have been eliminated and anyone registered to export food and agriculture-related goods can now export rice freely.

  • Garment and textile quotas will continue to be announced (currently 25 percent of the quotas is auctioned oil), and will be increased annually and eliminated over the medium term.

  • On the import side, traders can import freely any goods, except (i) items that are banned (weapons, firearms, and other hazardous materials; cigarettes, cigars, and other tobacco products; used consumer goods and materials and equipment; and most left-hand drive vehicles); and (ii) goods subject to licensing requirements (for most commodities, such requirements will be removed by 2005, except on sugar) or under special controls.

Under AFTA, on June 6, 2001, the government issued Ordinance No. 28 announcing changes in tariff lines consistent with the commitments under AFTA. These changes are effective from January 1, 2001:

  • 713 items have been transferred from the Temporary Exclusion List (TEL) to the Inclusion List (IL), leaving 1,200 items still in the TEL (under AFTA all items are expected to be moved to the IL by 2003).

  • For the items in the IL, list totaling 4,986 items, 65 percent are subject to a tariff rate of 0–5 percent and the remaining 35 percent to a tariff rate of 5–20 percent (under AFTA tariffs on 97 percent of tariff lines will be reduced to at most 20 percent by 2003 and 0–5 percent by 2006).

The bilateral trade agreement with the United States was ratified in late 2001, and is expected to lead to a substantial increase in Vietnam’s exports to the United States.

With respect to the WTO, bilateral negotiations are expected to begin before end-2001. An interministerial committee is preparing documents to be circulated to WTO members in this regard.

Vietnam: Private Sector Development and State-Owned Enterprise Reform

The private sector accounts for around 40 percent of GDP in Vietnam (compared with 50 percent in China), but mainly in agriculture and for only one-third of industrial output. Recent World Bank studies indicate that small to medium-sized enterprises (SMEs) will need to contribute a much larger share of economic activity if Vietnam is to sustain real GDP growth at 6–8 percent. Private sector activity had been constrained by an entrenched bureaucracy, a non-transparent tax and administrative regime, and an uneven playing field in terms of market access, credit availability, and operating costs. Recent actions to accelerate private sector development include passage of the new Enterprise Law and amended Foreign Investment Law in 2000; adoption of a three-year state-owned enterprise (SOE) reform framework that provides for equitization; and implementation of trade opening measures (see Box 2).

Under the new Enterprise Law, business licensing requirements in 145 (out of 400) sub-sectors were lifted in 2000, making establishment of private firms considerably easier. Decree 30, also issued in 2000, led to revocation of a further 61 licenses and permits to ease entry under the Enterprise Law. Under the Bank’s PRSC, a condition for second tranche release is the removal or modification of business licenses in an additional 50 sub-sectors, which is expected by end 2001. Business registration costs also have been cut significantly and the approval process shortened. As a result, an estimated 26,000 SMEs had been registered by end-August 2001 employing more than 500,000 workers. This represents a 60 percent increase in registered enterprises since January 2000. Total registered capital is equivalent to US$2 billion, or 6 percent of GDP. The Enterprise Law will be supplemented with a decree on SMEs by end 2001. Existing provisions in the Enterprise Law on the use of land-use rights as collateral for bank loans will need stronger enforcement and greater transparency to ease credit conditions for SMEs. The liberalization of interest rates on bank lending since August 2000 should also help ensure better access of SMEs to bank credit.

Amendments to the Foreign Investment Law sought to improve the climate for FDI by focusing on:

(i) substituting business registration for licensing for export-oriented foreign-invested enterprises (FIEs);

(ii) allowing FIEs to buy foreign exchange to make payments within certain limits; (iii) permitting foreign bank branches operating in Vietnam to take mortgages; and (iv) providing government guarantees on certain types of infrastructure projects and encouraging investment by overseas Vietnamese. The dual price system, which also discriminates against FIEs, has been rolled back recently with a reduction in price gaps most notably on telecommunication and electricity tariffs. Under a decree adopted in August 2001, the dual pricing system is to be phased out and licensing and administrative procedures for FIEs further streamlined. Revisions to the Land Law are being aimed at: (i) easing local government control over allocating land and granting land-use certificates to households and enterprises: (ii) giving overseas Vietnamese the right to buy houses with attached land-use rights; and (iii) aligning compensation for nationalized lands with market value.

SOE reform: In view of the poor financial conditions and inefficiencies of many SOEs, the government adopted a five-year SOE reform plan in March 2001, with annual targets specified for 2001–03.1 The objectives of the plan are to reduce losses and improve competitiveness. Around 1,800 out of the more than 5,500 SOEs will be subject to enterprise-specific reform measures, mostly through equitization (1,400), divestiture (140), or liquidation/closure (220). An additional 200 enterprises will face merger/consolidation. These enterprises are mainly small and medium-sized SOEs in terms of state capital (11 percent of total) and SOE debt (10 percent of total), but they account for 31 percent of total SOE employment Under the first-year PRGF program, the targets are to equitize, divest, or liquidate/close 600–650 enterprises and merge/consolidate 80–90. Detailed implementation of this plan is being monitored under the Bank’s PRSC.

1 Details on the SOEs’ financial conditions can be found in EBS/01/43 (paragraphs 26 27 and Box 4 of the staff report, and paragraphs 20–23 of the MEFP).

12. Progress in banking reform, however, has been slow. In particular:

  • The remaining restructuring plans for three out of the four large SOCBs (Bank for Investment and Development (BIDV), Incombank (ICB), and Bank for Agricultural and Rural development (BARD)) were finalized and approved by the government in early October, three months behind schedule.

  • Audits on international audit and accounting standards (IAS) arc nearing completion for BIDV and BARD. However, in part because donor financing procedures proved more time consuming than expected, the structural benchmark on awarding of audit contracts for ICB and VCB was met but with a delay of two months (Table 6). The structural performance criterion on submission of a progress report on these audits was met in early October, also slightly behind schedule.

  • With respect to the joint-stock banks (JSBs), licenses of four problem banks (out of 48) were withdrawn as planned in June 2001, bringing to seven the number of bank closures/mergers.

Table 6.

Vietnam: Key Structural Policy Actions Under the First-Year PRGF Program 1/

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Based on October 2001 for the firs: PRGF review dale and April 2002 for the second review.