Viet Nam: Reform and Stabilization, 1986-1992

IMF Working Papers, May 1, 1993

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Viet Nam has made substantial progress in the transition to a market economy and toward financial stability since economic reform began in 1986.
Piecemeal measures were adopted at first, followed by the launching of a bold and comprehensive program of structural reform in March 1989.
Complemented by policies designed to achieve financial stabilization, the program met early success.
Continuation of the program was put at risk by the withdrawal of external financing by the former Soviet Union and the breakdown of preferential arrangements with the CMEA area.
Although economic performance weakened temporarily in the wake of these shocks, the Vietnamese intensified the adjustment process.
Viet Nam has since resumed its progress toward financial stability and sustained growth.

Transition trajectory:
- Initial phase: piecemeal measures beginning in 1986.
- Major reform phase: launching of a bold and comprehensive program of structural reform in March 1989.
Stabilization measures:
- Structural reform program was complemented by policies designed to achieve financial stabilization and met early success.
External shocks and risks:
- Withdrawal of external financing by the former Soviet Union.
- Breakdown of preferential arrangements with the CMEA area.
- These shocks temporarily weakened economic performance but prompted intensified adjustment efforts.
Outcome:
- Viet Nam resumed progress toward financial stability and sustained growth after the adjustment intensified.

Subjects: Banking, Commercial banks, Economic sectors, Exchange rates, Financial institutions, Foreign exchange, Public enterprises, Public sector
Keywords: Commercial banks, Eastern Europe, economic system, enterprise reform, Exchange rates, imputed interest, market economy, Public enterprises, Public sector, state enterprise sector, U.S. dollar, WP