Information about Asia and the Pacific Asia y el Pacífico
Journal Issue
Share
Article

Vietnam: Staff Report for the 2007 Article Consultation—Informational Annexes

Author(s):
International Monetary Fund
Published Date:
December 2007
Share
  • ShareShare
Information about Asia and the Pacific Asia y el Pacífico
Show Summary Details
ANNEX I Vietnam-Fund Relations

(As of July 31, 2007)

I. Membership Status: Joined: 09/21/1956; Article VIII (November 8, 2005).

II. General Resources Account:

SDR MillionPercent Quota
Quota329.10100.00
Fund Holdings of Currency329.10100.00
Reserve position in Fund0.010.00

III SDR Department:

SDR MillionPercent Allocation
Net cumulative allocation47.66100.00
Holdings1.523.18

IV. Outstanding Purchases and Loans:

SDR MillionPercent Quota
PRGF arrangements111.7833.97

V. Latest Financial Arrangements:

Date ofExpirationAmount ApprovedAmount Drawn
TypeArrangementDate(SDR Million)(SDR Million)
PRGFApr. 13, 2001Apr. 12, 2004290.00124.20
ESAFNov. 11, 1994Nov. 10, 1997362.40241.60
Stand-byOct. 6, 1993Nov. 11, 1994145.00108.80

VI. Projected Payments to Fund (SDR million; based on existing use of resources and present holdings of SDRs):

Forthcoming
20072008200920102011
Principal8.2824.8424.8424.8420.70
Charges/Interest1.272.452.332.202.08
Total9.5527.2927.1727.0422.78

VII. Exchange Rate Arrangement and Exchange Restrictions:

On February 25, 1999 the State Bank of Vietnam (SBV) revised the operation of the interbank foreign exchange market. Under this regime, the SBV allows interbank foreign exchange market rates to fluctuate by a maximum of ±0.25 percent a day (effective July 2002) from the previous day’s average interbank market rate. In January 2007, the trading band was widened from ±0.25 percent to ±0.5 percent.

While Vietnam officially maintains a managed floating exchange rate regime, the exchange rate has de facto been pegged to the U.S. dollar since August 2004. The SBV governor made announcements in August 2004 and January 2005 that annual exchange rate depreciation would be limited to one percent, and the dong in fact depreciated by 1 percent vis-à-vis the U.S. dollar in 2004 and by 0.8 percent in 2005. Although the authorities have not made any announcement to date regarding the expected movement of the exchange rate in 2006, the dong/U.S. dollar rate remained virtually unchanged during January-April 2006. Given that the Fund’s exchange arrangement classification is based on de facto and not de jure policies, Vietnam is now classified as maintaining a conventional fixed peg.

Vietnam has accepted the obligations of Article VIII, sections 2, 3, and 4 of the Articles of Agreement, and maintains an exchange system free of restrictions on the making of payments and transfers for current international transactions, except for exchange restrictions maintained for security reasons that have been notified to the Fund pursuant to Executive Board Decision No. 144-(52/51).

VIII. Article IV Consultations:

Vietnam is currently on a 12-month consultation cycle, subject to provisions of Board Decision No. 12794-(02/76) of July 15, 2002. The last Article IV Consultation was concluded on October 25, 2006.

IX. Technical Assistance: See attached matrix.

Resident Advisor:

Tax Computerization (FAD) through April 1998

In-Country Training/Outreach:

  • Conference on Compilation and Use of Core Inflation (APD/OAP), April 2007.
  • 4-session seminar for MPI on the Fundamentals of Macroeconomic Analysis, May 2006.
  • Conference on SBV Reforming (APD/MFD), March 2006.
  • STI Regional Course on Financial Programming and Policies, March 2005.
  • Workshop on Macroeconomic Policies for Parliamentarians (EXR/APD/INS), March 2004.
  • 10-session Seminar for Parliamentarians on the Fundamentals of Macroeconomics (APD), October-December 2003.
  • 10-session Seminar on Topics in Financial Programming for State Bank of Vietnam and related Government Agencies (APD), January–May 2002.

X. Other Visits:

The Deputy Managing Director, Mr. Kato, visited Vietnam in May 2005 and May 2007. The Managing Director, Mr. de Rato, visited in June 2004.

XI. Resident Representative:

Mr. Il Houng Lee has been Senior Resident Representative since August 2005.

Vietnam-Summary of Technical Assistance, 2002-07
DepartmentPurposeDate
Tax self-assessment pilot projects
FADTax self-assessment pilot preparationsJune-July 2002
FADTax self-assessment pilot preparationsNovember-December 2002
FADTax self-assessment pilot preparationsMarch-April 2003
FADIT for Tax self-assessment pilot preparationsMay/03
FADTax self-assessment pilot preparationsAugust/03
Assessment of training needs and organization change
FADTax self-assessment pilot preparationsSeptember/03
FADTax self-assessment pilot preparationsNovember/03
FADIntroduction of self assessment and reform of the tax administration taxpayers services; debt collectionFebruary-March 2004
FADAssessment of tax self-assessment pilot implementation and planning for the futureApril/04
FADStrategic planning and tax self-assessment pilot implementationJune-July 2004
FADTax self-assessment pilot implementationAugust/04
FADTax self-assessment pilot implementationOctober-November 2004
FADTax self-assessment pilot implementationNovember/04
FADTax self-assessment pilot implementationMay/05
FADTax self-assessment pilot implementationJuly/05
FADTax self-assessment pilot implementationNovember-December 2005
FADTax self-assessment pilot implementationMarch-April 2006
FADTax self-assessment pilot implementationJune-July 2006
FADTax administration reform: key areasNovember 2006
FADPerformance measurement in tax administrationDecember 2006
FADTaxpayers service centersMarch 2007
Tax Policy and Administration reform
FADTax policy and administration reformFebruary-March/02
FADTax policy and administration reformJuly/02
FADTax policy and administration reformNovember/02
FADTax policy and administration reformMay-June/03
FADAssessment of the major taxesMay-June/04
FADReview of tax administration TA to dateNovember/04
FADTax policy and administration reform- Strategic planningMarch/05
FADRevenue administrationJuly-August/05
SOCB Restructuring
MFDSOCB restructuringSeptember/02
MFDSOCB restructuringNovember/02
MFDSOCB restructuringJune/03
MFDSOCB equitizationSeptember/04
SOCB restructuring and foreign reserve management
MFDBanking restructuring and foreign exchange management at the SBVMarch/06
Article VIII and current account liberalization
MFD/LEGArticle VIII and Forex Control OrdinanceFebruary/05
MFD/LEGDrafting Foreign Exchange OrdinanceJune/05
Banking supervision
MFDBanking supervisionAugust/04
MFDBanking supervision strengtheningNovember/04
MFDBanking supervision strengtheningApril/05
MFDBanking supervision strengtheningNovember/05
MFDBanking supervision, taking the views of SOCB financial restructuringMarch-April/06
Strengthening the SBV audit capacity in the SAO
MFD/OIASafeguards-related T.ASeptember/02
MFDStrengthening SBV audit capacity in the SAODecember/02
FINStrengthening SBV audit capacity in the SAOJune/03
MFDStrengthening SBV audit capacity in the SAODecember/03
Monetary and Exchange Operation
MFDBanking Issues, Monetary and Foreign Exchange OperationFebruary/04
MFDInflation Targeting IssuesNovember/04
MFD/STAReviewing monetary TAApril/05
MFDCPI statistics and core inflationSeptember/06
STACore inflation measurement and inflation forecastingApril/07
MCMStrengthening the monetary policy framework and follow-up on core inflation measurementApril-May/07
Anti-money laundering
MFD/LEGTA program for anti-money laundering and combating the financing of terrorismDecember/03
MFD/LEGThe Progress in AML/CFT regime and internal control, workshop on AML/CFTMarch/05
LEGAnti-money laundering and combating the financing of terrorism (AML/CFT) measuresJune/07
National Income Account and Statistics
STANational Income Account and StatisticsAugust-September/02
STANational Income Account and StatisticsMay-June/03
STANational Income Account and StatisticsFeb-March/04
STANational Income Account and StatisticsSeptember/04
Balance of payment statistics
STABOP statistics and guidance in the development of international investment position statisticsSeptember/03
STABOP statisticsFebruary-March/06
CPI Statistics
STA/MFDCPI statistics and core inflation primary understandingApril/05
Monetary Statistics
STAMonetary StatisticsApril/05
Debt sustainable analysis
PDRDebt sustainable analysisOctober/02
Tax Administration Law
LEGTax lawFebruary/04
LEGTax administration lawNovember-December 04
LEGTax legislationAugust/05
Capital Market development
ICMCapital Markets DevelopmentMay-June/04
Foreign reserve management
MCMForeign reserve managementNovember-December/06
ANNEX II Vietnam—Relations with the Asian Development Bank

The Asian Development Bank (AsDB) resumed its operations in Vietnam in October 1993. The Country Strategy and Program (CSP) endorsed in January 2002, proposed a focus on four pillars to align AsDB operations in Vietnam to the overarching objective of poverty reduction: (i) sustainable growth through rural development and private sector development, with a focus on small and medium enterprise development; (ii) inclusive social development, by mainstreaming poverty, gender, and ethnic dimensions in AsDB operations, with an emphasis on human capital development through secondary education and health; (iii) good governance, with special emphasis on public administration and civil service reform; and (iv) geographic focus on the impoverished central region. The AsDB is currently preparing the new CSP for 2007-2010. The preparation of the new CSP is aligned with the preparation schedule of the SEDP in order to synchronize, synergize and supplement the government’s development goals and objectives as espoused in the SEDP, and to allow for harmonization of development assistance in support of result-based SEDP implementation.

From October 1993 until the end-2005, the AsDB approved 55 public sector loans totaling about US$ 3.5 billion. Since December 1998, Vietnam has been classified as a B-1 country by the AsDB, which makes it eligible to supplement borrowing at ADF terms with limited amounts of borrowing at nonconcessional OCR terms. The cumulative $3.5 billion loan portfolio includes nearly $ 3.0 billion from the concessional Asian Development Fund (ADF) and US$520 million from Ordinary Capital Resources (OCR). Loans have been provided for (i) rehabilitating physical infrastructure in the agricultural, energy, and transport sectors; (ii) financial sector, public administration reform, and state-owned enterprise (SOE) reforms and corporate governance; and (iii) social, environmental, and cross-cutting concerns. The contract awards achievement in 2005 was $209.8 million as compared with $116 million in 2004, rendering a contract award ratio of 13.6 percent compared with 9.7 percent in 2004. Disbursement in 2005 attained $223.7 million as compared with $182.4 million in 2004. The disbursement ratio has increased from 15.7 percent in 2004 to 17.5 percent in 2005. The AsDB has also extended technical assistance amounting to US$123.7 million for 185 projects. In addition to public sector operations, AsDB has provided $168.5 million for 7 private sector loans. Vietnam also receives substantial support under the Greater Mekong Subregion (GMS) initiatives.

Support for policy and structural reforms to improve public sector efficiency and to encourage the development of the private sector is a vital component of AsDB operations in Vietnam. So far, the AsDB has approved eleven policy-based program loans in the agricultural sector, the financial sector, SOE reform and corporate governance and public administration reform, SME development and support to poverty reduction implementation. In addition to program lending, policy dialogue is an important feature in all of the AsDB’s loan projects in Vietnam. This includes support for increased efficiency of state-owned utilities through reforming their rate structure and other measures to increase cost recovery and to strengthen financial management, policy analysis, and planning. A high level capacity building program is also in place under the Japan Fund for Public Policy Training (JFPPT) funded by the Government of Japan.

The AsDB has been reorganized as of 1 May 2006, and Vietnam now belongs to the Southeast Asia Regional Department, along with Cambodia, Laos, Myanmar, Thailand, Malaysia, Philippines and Indonesia. The resident mission has been strengthened and has been performing programming functions and administration of a portion of loan projects. During the past years, the AsDB has helped the government carry out participatory poverty reduction assessment and rolling down the Comprehensive Poverty Reduction and Growth Strategy. AsDB was also active in supporting the Socio-economic Development Plan consultation process. AsDB and Fund staff work closely together to support the process of economic reforms in Vietnam. AsDB staff participate in Fund missions, exchange information, and consult on policy matters. The resident missions of the two institutions also cooperate closely.

Table 1.Vietnam: Public Sector Lending, by Sector, October 1993–July 2006(In millions of U.S. dollars)
SectorNumberApproved Amount
Lending553,519.3
Agriculture and Natural Resources11671.0
Education5239.0
Energy4660.0
Finance6335.0
Health, Nutrition, and Social Protection4159.2
Industry and Trade268.5
Law, Economic Management & Public Policy4151.4
Transportation and communication9695.5
Water Supply, Sanitation & Waste Management5304
Multi-sector5235.7
Technical assistance185123.7
Advisory and operational purposes13283.5
Project preparation5340.2
Source: AsDB.
Source: AsDB.
Table 2.Vietnam: Loan Approvals and Disbursements, 1997–2006(In millions of U.S. dollars)
1997199819992000200120022003200420052006 1/
Loan approvals 2/359.60284.00220.00188.50243.10233.50179.00296.40577.70-
Loan disbursements149.3127.8191.2218.9176.2231.7233.2182.4223.769.7
Undisbursed balance at the beginning of the year842.42997.481,191.561,190.381,086.151,118.801,198.101,191.591,313.691,560.87
Memorandum item:
Technical assistance approvals9.515.9310.349.128.429.288.617.6812.253.04
Source: AsDB.

As of July 2006

Includes loan components of regional projects in Viet Nam: 1998 - GMS: Phnom Penh to HCMC Highway ($100 million), 1999 - GMS: East-West Corridor ($25 million), and 2002 - GMS: Mekong Tourism Development ($8.5 million).

Source: AsDB.

As of July 2006

Includes loan components of regional projects in Viet Nam: 1998 - GMS: Phnom Penh to HCMC Highway ($100 million), 1999 - GMS: East-West Corridor ($25 million), and 2002 - GMS: Mekong Tourism Development ($8.5 million).

ANNEX III Vietnam—Relations with the World Bank Group 1

Partnership in Vietnam’s Development Strategy

A new Country Partnership Strategy (CPS) was presented to the World Bank Board in February 2007. The CPS is fully aligned to Vietnam’s Socio-Economic Development Plan (SEDP) 2006-2010 and sets out the planned World Bank support between FY07 and FY11. The objectives of the SEDP can be mapped onto four broad pillars, which in turn are the organizing principles of the CPS: (i) improving the business environment; (ii) preserving social inclusion; (iii) strengthening environmental and natural resource management; and (iv) improving governance.

A common theme underlining the four pillars is the need to complete the remaining first-generation structural reforms, while moving forward on a set of ambitious second-generation reforms. The former group is related to the transition to a market economy and the restructuring of the state sector. The latter group focuses on the institutional underpinnings for the operation of a more complex economy, as Vietnam becomes a middle-income country. Through these reforms, the role of the Government will be transformed from direct producer of goods and services to regulator and provider of the foundations for a well-functioning, equitable, modern market economy.

Improving the Business Environment. Support for this theme will witness a shift in emphasis from design to implementation of the policy reform agenda. It focuses on banking reform and overall financial sector development; improved competitiveness with fuller integration with the world economy; a more level playing field for businesses regardless of ownership; laying a better foundation for knowledge-based growth and enhancing agricultural competitiveness; and building up more efficient and reliable infrastructure.

Preserving Social Inclusion. Priorities for World Bank Group support are: better understanding of poverty and piloting of new instruments to reach the poor; mainstreaming gender issues across the portfolio and including people with disabilities in the development process; increasing access to quality, basic infrastructure services for the rural poor; increasing the access to affordable and better quality education and health care services; including and empowering ethnic minorities in the development processes; improving policies and services to address the needs to urban poor and migrants and reducing vulnerability to adverse shocks.

Strengthening Environmental and Natural Resource Management. Rapid economic growth is putting the environment increasingly under stress. The livelihoods of poor people in Vietnam still depend overwhelmingly on natural resources. World Bank’s activities will focus on livelihood-supporting roles and public benefits of better managed environment and natural resources. In practice, this will raise a range of challenges related to regional planning; land, forestry, water resources and integrated river basin management; and the introduction of modern tools for environmental protection.

Improving Governance: Progress across the structural, social and environmental areas will require more modern institutions, emphasizing transparency and accountability. The thrust of Bank support under this pillar will be: strengthening public financial management, simplification of administrative procedures, assisting with the Government’s fight against corruption, greater accountability of public service providers, modernizing the planning process with a focus on development outcomes and more participatory approaches.

World Bank Group Strategy and Lending

The World Bank Group employs a broad range of instruments to support the objectives laid out by the Socio-Economic Development Plan 2006-2010 (SEDP 2006-2010) and other key strategies of the Government. They include analytical and advisory activities; IDA investment projects; Poverty Reduction Support Credits (PRSCs); IFC’s equity, loan and TA participations; Mekong Private Sector Development Facility (MPDF) and Multilateral Investment Guarantee Agency (MIGA) activities; and donor partnerships and ODA coordination. IDA credits provide policy, institutional and physical investment support for Vietnam’s development and structural reforms, with PRSCs used as vehicles for policy dialogue.

The Scale of Bank Group Activities: The CPS operational program is calibrated based on an assumption of annual IDA lending envelopes in the order of US$900 million. Actual allocations will depend on Vietnam’s performance relative to other potential IDA recipients and on the overall resource envelope. During the CPS period, Vietnam’s GNI per capita is projected to move steadily towards the IDA graduation threshold, and the Vietnamese government has expressed its desire to seek an opportunity for blending IDA and IBRD resources. The World Bank has scheduled a creditworthiness review in FY08 to this effect. The IFC and MIGA programs are also expected to grow in the coming years.

Poverty Reduction Support Credits (PRSCs): A sixth PRSC operation for US$175 million equivalent was approved by the Board in June 2007. This PRSC is the first in a series of five proposed operations (PRSCs 6-10) to support the reforms envisaged chiefly in the SEDP 2006-2010, which also serves at the Poverty Reduction Strategy (PRS) for Vietnam. Prior to this new series, five PRSC operations mainly supported the implementation of the Government’s Comprehensive Poverty Reduction and Growth Strategy. PRSC 1, a two-tranche operation for US$250 million was approved by the Board in June 2001. Its focus was mainly on structural reform issues in trade liberalization, financial sector and SOE reforms, and private sector development. The following five operations PRSC 2-5 had a significantly broader coverage and supported policy actions in areas such as health, social protection, education, and environmental protection and natural resource management. They also included actions to build modern governance systems in Vietnam, such as those aimed at public financial management and public administration reform, modernizing planning, and fighting corruption. Each of these four operations was for US$100 million. PRSC operations have served as an effective donor coordination device, being co-financed by an increasingly large number of donors. The number of co-financiers has increased from 4 at the time of PRSC 1 to 11 for PRSC 6. The contribution of co-financiers exceeded US$150 million for PRSC 5. Apart from providing resources, PRSCs serve as a single unified platform for policy dialogue between about 16 donors and the Government on a broad range of issues.

Knowledge Products: In addition to its lending program, the World Bank has been working on capacity-building and knowledge-sharing in key areas of emphasis. The annual Vietnam Development Reports (VDR), written in coordination with a large number of donors and submitted to the year-end Consultative Group meeting, summarizes the accumulated knowledge in a specific policy area and fosters the policy and institutional reform agenda. Recent VDRs have focused on thematic areas such as poverty, governance, and business development. The VDR 2007 was cross sectoral, and based on the SEDP 2006-2010 laid out a roadmap for tackling development challenges over the next five years. A forthcoming VDR will focus on social protection. Upcoming reports over the CPS period will include Skills for Growth and Tertiary Education, Investment Climate Assessment, Capital Market Monitoring and Assistance, Country Social Analysis, Health Issues Paper, Country Environmental Analysis, Land Policy Dialogues, Public Expenditure Review/Integrated Fiduciary Assessment and Country Financial Assessment Update.

IMF-World Bank Collaboration in Specific Areas

Collaboration between the World Bank and the IMF was essential to launch the PRSC-PRGF program in 2001. The process leading to this program spanned four years, starting at the onset of the East Asian crisis. The overall framework for this collaboration was laid out in 1998, in preparation for what was then expected to be the second Structural Adjustment Credit for Vietnam. The lead agency in each policy area was identified in the Policy Framework Paper and particularly in the Structural and Sectoral Policy Matrix for 1999-2001. The direct involvement of the IMF in some of the structural areas such as financial sector, SOE, and trade reform was justified because of their potential impact on macroeconomic stability.

Table 1.VIETNAM—FY04-07 ACTUAL DELIVERIES
FiscalProject DescriptionIDA Amount
Year(US$ mil.)
2004Vietnam PRSC III$100
VN-Road Network Improvement$225
VN-Urban Upgrading$222
Vietnam Water Resources Assistance$158
Total$706
2005Vietnam PRSC IV$100
VN-HIV/AIDS Prevention Project$35
VN-Targeted Budget Support for EFA$50
VN-Road Safety$32
VN-Water Supply Development$113
VN-Rural Energy 2$220
VN-Forest Sector Development Project$40
VN-Avian Influenza Emergency Recovery Project$5
Payment System and Bank Modernization 2$105
Total$699
2006Vietnam PRSC V$100
VN-ICT Development$94
Mekong Health Support$70
Customs Modernization Project$66
VN-RRD Rural Water and Sanitation$46
VN-Transmission and Distribution 2$200
Rural Transport 3$106
VN-Natural Disaster Risk Management Project$86
Total$768
2007Vietnam PRSC VI$175
VN-Second Higher Education Project$60
VN-Program 135 Phase 2 (DPL)$50
VN-Avian and Human Influenza Control$20
VN-Mekong Transport Infrastructure Development$207
Mekong Transport/Flood Protection (Supplementary)$25
VN-Ho Chi Minh City Infrastructure Fund (HIFU)$50
VN-Coastal Cities Environment and Sanitation
Project$125
Total$712

As a result of this overall framework, the World Bank supported policy reforms in collaboration with the IMF in several areas, including external debt management, financial sector reform, SOE reform, and public expenditure management. In some of these areas, the World Bank and the IMF identified complementary sets of policy triggers for the PRSC and the PRGF programs respectively. In others, cooperation between the two institutions took place in the context of specific tasks, not directly related to lending.

Since the expiration of the PRGF in April 2004 the two institutions have closely collaborated in the discussion of PRSC prior actions and triggers in the policy areas that used to be covered by the PRGF agreement. The IMF has provided Letters of Assessment in support of the last three PRSC operations. In the area of public financial management, the World Bank is currently following up on the technical assistance provided by the IMF in relation to tax reform and revenue management. Joint work is also under way in support of the establishment of a modern central bank, with the IMF providing technical assistance on monetary policies and banking supervision, whereas the World Bank has set up an investment credit to reorganize the State Bank of Vietnam and develop appropriate information management systems.

From 2005 onwards, the World Bank and the IMF have jointly prepared an annual Debt Sustainability Assessment. More recently, they joined efforts in commenting on the direction and contents of the SEDP 2006-2010, including a Joint Staff Advisory Note submitted to the World Bank Board in December 2006. The IMF and the World Bank also collaborate in the development of reliable economic statistics. The IMF focuses on improving balance of payments, national accounts, and price statistics, while the World Bank concentrates on issues related to the production of high-quality household and enterprise surveys, and to help develop broader access to data in Vietnam.

ANNEX IV Vietnam—Statistical Issues

While data provision to the Fund is broadly adequate for surveillance, the reliability and coverage of macroeconomic statistics have significant deficiencies that hamper economic analysis. Compilation and dissemination are in need of substantial improvement, so that data properly reflect economic developments and assist policy formulation, implementation, and monitoring. The authorities are cooperating with the Fund, but work is hampered in some areas by the lack of authorization to release data. Vietnam has few official statistical publications that provide coverage beyond the real sector. A Vietnam page was introduced in the GFS Yearbook in 1999 (data were last reported for fiscal year 2004) and in the IFS in 2001. Vietnam has participated in the GDDS since September 2003, and its metadata are posted on the Fund’s Dissemination Standards Bulletin Board.

Fund technical assistance has contributed to improvements in a number of statistical areas. The STA multisector statistics/General Data Dissemination System (GDDS) mission in July 2001 found a number of deficiencies and recommended an action plan. The follow-up STA mission in December 2001 agreed on a program to improve national accounts and price statistics. Subsequently, a STA peripatetic expert was assigned to assist the General Statistics Office (GSO) under a five-year project that commenced in January 2002, and a series of four follow-up missions was fielded. More recently, there have also been follow-up missions in balance of payments statistics in September 2003 and 2006. A mission on core inflation measurement and inflation forecasting took place in April 2007.

National accounts

Vietnam has benefited from extensive technical assistance in the area of national accounts and price statistics. The GSO provides quarterly and annual data on gross domestic product (GDP) by type of economic activity and annual data by expenditure2 (both in current and constant prices), and monthly and annual data on external trade, industrial output, retail sales, and prices. The annual constant price GDP estimates have 1994 as the base year and are in need of updating. While the national accounts methodologies is broadly consistent with the System of National Accounts 1993, the compilation process suffers from poor data collection practices and a lack of coordination and communication between data collection agencies. In 2001 the GSO introduced new methodology for calculating GDP and, in 2003, published two revised handbooks on sources and methods in Vietnamese.

Prices

The consumer price index (CPI) methodology is largely in line with international standards. The GSO released a revised CPI in May 2006 based on data from the 2004 Vietnam Household Living Standards Survey (VHLSS). The basket now includes about 500 items, compared with about 400 for the previous index (based on the 1998 VHLSS), and the weight of food has decreased from 47 percent to 42 percent. 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. The GSO planned to introduce a producer price index in late 2001 but this has been delayed for technical reasons. Trade price indices are also compiled, but not used in the national accounts by the GSO because the sample size is deemed too small. The authorities are working on a core inflation index.

Government finance statistics

The Ministry of Finance’s (MoF) State Budget Department produces provisional monthly, quarterly, and annual data on government operations shortly after the end of the reference period and final data for the fiscal (calendar) year are produced after a delay of about eighteen months. These data reflect the consolidated operations of the state budget, which covers all four levels of government: central, provincial, district, and commune. They exclude data on off-budget investment expenditure, quasi-fiscal activities of SOEs and extrabudgetary 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 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. Like the national accounts, provisional data are compiled before the end of the reference period and thus involve a projected component. The quarterly data are only revised when data are compiled for the same quarter of the following year. The MoF’s External Finance Department maintains a centralized record of all general government external debt, excluding guarantees issued on behalf of state-owned enterprises. The MoF, with support from the UNDP, has put in place an external debt management system for the recording of disbursements and multiple currency loans, which as of May 2006 was in the testing phase.

Despite these shortcomings, the authorities have made progress in a number of other areas related to fiscal transparency, including implementation of an improved budget management law and adoption of a 1986 GFS-consistent budget classification at all levels of government. The authorities published for the first time in late 1998 the fiscal outturn for 1997 and the approved budget for 1999, although both in highly aggregated form. Starting in late 2001, the MoF began posting annual budget outturns and plans on its external website, including by major revenue and expenditure items. However, considerable actions remain to be taken to improve the coverage of fiscal data as recommended in the 1998 Bank-Fund report on fiscal transparency, the STA multisector statistics mission of 2001, and the 2005 Public Expenditure Review.

In this context, the government continues to work toward gazetteing and publishing the annual national budget, as well as preparing commune-level budgets, implementing the GFS-based functional budget classification system, initiating work on revising government accounting standards, preparing a medium-term expenditure framework, and introducing an integrated financial management system (IFMS) for improving treasury management and fiscal reporting. The 2001 STA mission found that the functional classification had not yet been fully aligned with international classification standards, which might hamper formulation, execution, and monitoring of fiscal policy. The IFMS should allow a detailed classification of provisional, as well as final budget accounts. In addition, it will permit incorporation of data on extrabudgetary funds into the Treasury database.

Annual GFS data through 2004, excluding extrabudgetary funds and social security funds, have been reported for publication in the GFS Yearbook, using the 1986 GFS format. No sub-annual fiscal data have been reported for publication in IFS since 2001.

Monetary and financial statistics

The State Bank of Vietnam (SBV) reports monetary and financial data to the Fund, including: (i) the monetary survey (on a monthly basis with a ten-week lag), (ii) the central bank balance sheet (on a monthly basis and typically with a twelve-week lag) (iii) detailed consolidated balance sheets (“derivation tables”) for six state-owned and 77 non-state deposit money banks and individual balance sheets for the four large state-owned commercial banks (SOCBs) (since the beginning of 2001 on a monthly basis and typically with a twelve-week lag; (iv) deposit and lending rates of the large SOCBs (on a monthly basis and for various maturities); (v) data on reserve requirement on a monthly basis and with a twelve-week lag; and (vi), data on open market operations on a daily basis with a twelve-week lag. Since December 2005 the consolidated balance sheets of deposit money banks cover additionally five financial companies. Recently, monetary data and data on foreign reserves (gross and net official international reserves and net foreign assets of the banking system) have been submitted to the APD mission team with a lag of 8–9 weeks.

In January 1999, the SBV and commercial banks began implementing new charts of accounts for compiling money and banking data, developed with STA assistance. However, they do not adequately sectorize credit for monetary programming purposes, in particular failing to distinguish between bank credit to state-owned enterprises (SOEs) and to other nonstate sectors of the economy. Therefore, in addition to its regular monthly reports, the SBV has designed a new monthly report form for the four large SOCBs for submitting sectorized credit data to the central bank. The July 2001 STA mission encouraged the SBV to develop a reporting scheme for a comprehensive breakdown of banks’ credit to the economy by borrowing sectors, sub sectors, and ownership of enterprises. The follow-up mission that took place during April 14-28, 2005 recommended changes to new bank report forms to allow greater sectorization of bank credit. In addition, it recommended that a list of state-owned enterprises that have been privatized and therefore should be classified as private enterprises be distributed to banks in order to guide their data reporting on enterprises; that funds for on-lending be reclassified out of banks’ “unclassified liabilities” to “other deposits”; and gave a presentation of how Fund accounts should be compiled in monetary statistics. Further cooperation from the authorities is needed to resolve data discrepancies involving credit data for a state-owned bank. These discrepancies may reflect possible noncoverage and/or omission of certain loans and financial leases, offset by lower deposits and other liabilities.

External sector statistics

The SBV compiles quarterly and annual balance of payments (BOP) statistics with a one- to two-month lag, although the data reported to the Fund for publication are less timely—the data published in the August 2007 issue of the IFS are for the second quarter of 2006. The SBV does not compile international investment position statistics. Since 1995, monthly and annual trade data have been compiled using customs reports, but the coverage and accuracy of these data need to be improved. In particular, the commodity breakdown of a large share of reported exports and imports (approximately 17 percent and 27 percent respectively in 2006) is unknown. Data on invisibles continue to be based largely on banking records, which provide incomplete coverage and identification of the types of transactions. Improvements are particularly needed for data on tourism revenue and workers’ remittances.

Improvements in BOP statistics, in particular foreign direct investment (FDI), also continue to be hampered by interagency coordination problems. Data on FDI are now compiled by the SBV based on quarterly and semi-annual survey reports received from foreign enterprises operating in Vietnam and supplemented by reports from SBV branches. The Ministry of Planning and Investment (MPI) also collects administrative data on FDI. However, at the September 2000 ASEAN Workshop on Improving the Quality of FDI Data, the authorities indicated that problems persisted with the survey response rate, as not all FDI enterprises were providing the requested information. Moreover, the 2001 STA GDDS mission noted that no effort had been made to distinguish head office and other nonresident liabilities in the reported data. The 2003 and 2006 balance of payments statistics missions recommended that the MPI, GSO, and SBV work jointly to improve FDI questionnaires and processes, including collecting data on both stocks and flows.

The SBV maintains data on contracting of commercial debt (by SOEs and privately owned firms). Some loans are reported only after an extended delay, and the reporting of disbursements and repayments remains poor. Data on contracting, disbursement, and service of official debt are maintained by the MoF. The MPI also reports the loan obligations of foreign investors. The STA missions found that the overlapping responsibility for debt statistics has at times resulted in some deficiencies in coverage, including the lack of monitoring certain leasing arrangements (e.g., for aircraft). The 2006 mission also recommended creation of a line item for portfolio capital flows to capture the 2005 sovereign bond issuance, as well as expected future portfolio inflows, and a draft report form was left with the authorities for their review. Recent SBV data reflect the recommended breakdown for portfolio inflows.

VIETNAM: TABLE OF COMMON INDICATORS REQUIRED FOR SURVEILLANCE

As OF August 10, 2007

Date of Latest ObservationDate ReceivedFrequency of Data6Frequency of Reporting6Frequency of Publication6
Exchange Rates8/07/078/09/07DMW
International Reserve Assets and Reserve Liabilities of the Monetary Authorities15/31/076/27/07MINA
Reserve/Base Money5/31/077/11/07MINA
Broad Money5/31/077/11/07MINA
Central Bank Balance Sheet5/31/077/19/07MINA
Consolidated Balance Sheet of the Banking System5/31/077/19/07MINA
Interest Rates27/31/077/31/07MINA
Consumer Price Index7/15/077/24/07MMM
Revenue, Expenditure, Balance and Composition of Financing3 - General Government4NA
Revenue, Expenditure, Balance and Composition of Financing3- Central Government6/30/078/1/07QQA
Stocks of Central Government and Central Government-Guaranteed Debt520066/26/07IINA
External Current Account Balance2005 and 20068/7/07AAA
Exports and Imports of Goods and Services77/31/077/25/07MMM
GDP/GNP7/31/067/23/07QQQ
Gross External Debt20068/3/07IANA

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

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.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); Not Available (NA)

Services data available on an annual basis.

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

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.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); Not Available (NA)

Services data available on an annual basis.

1Contact person: Ms. Keiko Sato.
2GDP by type of expenditure was calculated from 2002Q1 to 2003Q2 but discontinued due to lack of resources.

Other Resources Citing This Publication