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Vietnam-IMF discuss challenges to middle income economy transition

HANOI, March 14 (Xinhua) — A workshop on handling policy challenges in transition to the middle income economy was held here on Wednesday by the State Bank of Vietnam (SBV) and the International Monetary Fund (IMF), with participation of many domestic and foreign experts.

Vietnam is facing with inflation, trade deficit, fluctuant interest rates, public debts and other difficulties in the context that the country has shortly become a middle income economy. We are trying hard to restructure the economy and not to fall into the “middle income trap”, said SBV deputy governor Le Minh Hung.

Hung said, along with the government’s policies to strictly control inflation and stabilize the macro economy and social security, the SBV has implemented a tightened monetary policy, contributing to successfully fulfilling the set goals.

Addressing the conference, IMF experts, Rina Bhattacharya and Nombulelo, spoke of factors that have impacts to inflation, and about Vietnam’s monetary policy.

They recommended, the SBV should be entrusted with an independent and clear task, i.e. to stabilize the price. Besides, administrative measures to control the interest rates and allocation of credit growth should be abolished. Also, the SBV should establish a corridor for the interest rates seen as an important tool in its monetary policy, which is applied to both the lending and deposits.

Mentioning Vietnam’s GDP and credit growth which is similar with other economies, but moves with a faster speed and more fluctuant, Yin Sze Liew from Singapore’s monetary management office, said Vietnam should carefully review those impacts to the country’s economy.

The transition in Vietnam’s monetary policy would be more complicated because it takes place quickly, in the state of dollarization, and for huge goals of restructuring, Liew said.

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