IMF: VN’s growth in 2020 among highest in the world
12:10 | 21/11/2020

VGP – Viet Nam’s growth this year is expected to be 2.4%, among the highest in the world, thanks to its decisive steps to contain the health and economic fallout from COVID-19, according to the International Monetary Fund (IMF)’s statements of IMF staff teams that convey preliminary findings after a visit to Viet Nam.

The fiscal response has been largely geared towards supporting vulnerable households and firms and has benefited from prudent policies.

A strong recovery is expected in 2021. Growth is projected to strengthen further to 6.5% as normalization of domestic and foreign economic activity continues.

Fiscal and monetary policies are expected to remain supportive, although to a lesser extent than in 2020. Inflation is expected to remain close to the authorities’ target at 4%.

This year, the fiscal deficit is expected to widen due to a decline in revenues and higher cash transfers and capital spending. Fiscal support should be maintained in 2021, with improving efficiency in execution as priority. Over the medium-term, the emphasis should be on mobilizing revenue for financing green and productive infrastructure, strengthening social protection systems, and safeguarding debt sustainability.

The IMF stated that reforms to reduce economic dualism between the domestic and Foreign Direct Investment sectors and lift productivity are crucial to support robust and inclusive growth while continued efforts to remove structural distortions and improve the business climate are welcome.

Priority should be given to reducing the regulatory burden faced by domestic private firms, improving access to land and financial resources, particularly for SMEs, and reducing corruption.

Establishing an expedited SME-specific insolvency regime would help unlock capital and prevent unnecessary liquidations, the statements stress, adding that reducing labor skill mismatches, increasing human capital and technology access would also boost labor productivity.

An International Monetary Fund (IMF) team led by Era Dabla-Norris had a virtual mission during October 15 - Nov 13, 2020, to conduct discussions for the 2020 Article IV consultation with Viet Nam.

Era Dabla-Norris is a Division Chief of the Asian I Division in the IMF's Asia Pacific Department and mission chief for Viet Nam.

By Thuy Dung

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