Viet­nam's econ­omy is at risk with­out re­forms: IMF

The Pak Banker - - COMPANIES/BOSS -

Viet­nam risks be­ing vul­ner­a­ble to ex­ter­nal shocks if it doesn't push through re­forms to strengthen its bank­ing sys­tem and re­struc­ture state busi­nesses, ac­cord­ing to In­ter­na­tional Mon­e­tary Fund chief Chris­tine La­garde.

The South­east Asian na­tion isn't in a po­si­tion to with­stand eco­nomic blows from tight­en­ing of mon­e­tary poli­cies else­where, a deep and pro­longed drop in com­mod­ity prices and a slow­ing China with­out re­forms, she said in a March 18 in­ter­view in Ho Chi Minh City. "The risk is that from be­ing slightly vul­ner­a­ble, Viet­nam could be­come very vul­ner­a­ble to ex­ter­nal shocks," she said. "It would ex­pose the Viet­namese econ­omy and that would not be good for the Viet­namese pop­u­la­tion." Viet­nam's in­te­gra­tion with the global econ­omy has driven growth and re­duced poverty. The econ­omy is fore­cast to grow at 6.6 per­cent this year, ac­cord­ing to Bloomberg sur­veys, while Prime Min­is­ter Nguyen Tan Dung has pro­posed rais­ing the coun­try's 2016 eco­nomic ex­pan­sion tar­get to 7 per­cent from 6.7 per­cent.

The bench­mark VN In­dex of Viet­namese stocks fell 0.6 per­cent at the close on Mon­day lo­cal time. The gauge has gained 10 per­cent since this year's low on Jan. 21.

The na­tion's poverty rate has dropped to 13.5 per­cent from 60 per­cent in 1993 and its eco­nomic growth is ex­pected to be "solid" at more than six per­cent this year, La­garde said in a visit to the coun­try last week, dur­ing which she met with the coun­try's top lead­ers. Viet­nam, which is in the process of a once-in-five-years political tran­si­tion, now has one of the world's most open economies, she said. "Viet­nam has done very well -- to have the abil­ity to main­tain macroe­co­nomic sta­bil­ity in an en­vi­ron­ment which is chal­leng­ing be­cause the rest of the world is not grow­ing at the pace and the po­ten­tial we would like to see is quite re­mark­able," La­garde said in the in­ter­view. "It has done very well in terms of re­duc­ing poverty and it has not in­creased in­equal­ity, which of­ten comes with growth." Still, the na­tion's eco­nomic ex­pan­sion since 2008 has been slower than the two pre­ced­ing decades and it has failed to match per-cap­i­tain­come growth that the re­gion's most suc­cess­ful economies ex­pe­ri­enced sim­i­lar stages in de­vel­op­ment, she said.

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