The statement was made by IMF chief to Vietnam, Era Dabla-Norris, following the conclusion of a virtual mission where IMF staff exchanged views with senior officials from Vietnamese government agencies.
Dabla-Norris said Vietnam’s fiscal response has been largely geared towards supporting vulnerable households and firms and the country has benefited greatly from prudent policies adopted in the past.
She added that monetary policy easing and temporary financial relief measures by the central bank have alleviated liquidity pressures, lowered the cost of funding, and facilitated the continued flow of credit.
Vietnam is expected to see a strong recovery in 2021, projected at 6.5% as domestic and foreign economic activity returns to normal while fiscal and monetary policies are expected to remain supportive, said Dabla-Norris.
According to the IMF official, Vietnam is still facing uncertainties from possible renewed outbreaks, a protracted global recovery, ongoing trade tensions and corporate distress.
Therefore, flexibly adjusting the size and composition of the policy support will be important and fiscal policy should play a larger role in the policy mix.
She suggested that fiscal support should be maintained in 2021, with improving efficiency in execution as priority while in the medium term, the emphasis should be on mobilising revenue for financing green and productive infrastructure, strengthening social protection systems, and safeguarding debt sustainability.
Regarding its monetary policy, it should remain supportive in the near term. Greater two-way exchange rate flexibility within the current framework would reduce the need to build reserve buffers and facilitate the adjustment to a potentially more challenging external environment.
In her statement, the IMF official said the mission also welcomes Vietnam’s commitment to gradually modernise its policy frameworks.
