Press Release No. 07/108

Press Release: Statement by IMF Deputy Managing Director Takatoshi Kato at the Conclusion of a Visit to Vietnam

May 24, 2007

Mr. Takatoshi Kato, Deputy Managing Director of the International Monetary Fund (IMF), made the following statement today in Hanoi:

"I am very happy to be back in Vietnam and see so much progress since my last visit two years ago. The size of the economy has grown impressively from $45 billion in 2004 to more than $60 billion last year; global integration has accelerated, with annual exports now reaching $40 billion and FDI commitments surging to $10 billion; and Vietnam has continued to make great strides in reducing poverty and meeting its other socio-economic objectives.

"Although Vietnam entered the global economy later than most of its Southeast Asian neighbors, its impressive progress to date gives me optimism about the future. This year's accession to the WTO clearly signals Vietnam's commitment to completing its transformation into a market-based economy and further deepening its international economic integration. The strong contribution of FDI to sustained export-led growth, and the large inflows into the emerging capital market, already show the considerable benefits that can be reaped by such integration.

"However, there are also challenges that will require determined and, at times, complex policy responses. Implementing monetary and exchange rate policies in the presence of growing capital flows, managing fiscal policy when aggregate demand pressures are building up while prices are increasingly liberalized, and ensuring debt sustainability when investment needs are large are some of the immediate challenges. Moving on to the next stage of reforms in the critical state-owned commercial bank and state-owned enterprise sectors is also likely to prove challenging.

"Prime Minister Nguyen Tan Dung at our meeting yesterday reaffirmed the Government's commitment to push forward with its reform agenda. The leadership his government has shown since it took office last year, the positive investment climate generated by continued reforms, and Vietnam's resourceful and agile labor force bode well for its continued success as it endeavors to lift itself from the ranks of low-income countries. We congratulate the government on its accomplishments to date, and stand ready, along with other development partners, to support the achievement of its objectives by continuing to offer our policy advice, training, and technical assistance in areas under our mandate."