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Vietnam not seeking IMF loan program: World Bank
Vietnam is not seeking an International Monetary Fund loan program to deal with pressures from economic overheating, contrary to market rumors, a senior World Bank official said on Thursday.
Jim Adams, World Bank vice president for the East Asia and Pacific region, said Vietnam's government has responded appropriately to signs of economic overheating caused by rapid credit growth in 2007.
"There have been rumors in the market that Vietnam was going to the IMF, and that is not true," Adams told Reuters in an interview.
The IMF "has not received a request from the government and right now (they) are not expecting to receive a request," he said.
The Vietnamese government and the central bank have tried to bring soaring food prices under control with three interest-rate increases this year, widened the currency trading band of the closely managed dong and effectively devalued the currency by 2 percent earlier this month.
A weakening fiscal position and limited foreign-exchange reserves have prompted some market analysts to warn of a potential currency crisis in the Southeast Asian economy, one of Asia's fastest-growing economies.
Inflation bites the dong
In addition to falling stock and property markets, the dong has come under increasing pressure from inflation, which accelerated to 26.8 percent in June, driven by a jump in food prices.
The IMF said recently that conditions in Vietnam have "clearly become more difficult and weighed on investor sentiment."
"We are concerned, but we're very positive with what is being done," Adams said. "We have a fairly good understanding of what has led to this in terms of the overheating and we think the government is responding appropriately to the underlying core of this."
While the Vietnamese government had lowered its growth estimates, Adams said the World Bank still believes growth would be in the 7 percent range over the medium term.
"We think that is doable, given the policy package that has been put in place," Adams added. "We feel very confident about the medium term.
"What we think they are going through is a short-term set of challenges. We think the government has put in place the right measures," he said.
The World Bank on Thursday approved $150 million in scheduled budget support for Vietnam and an additional $170 million credit to develop two major waterway corridors in the Northern Delta region.
The funding is part of a series of loans to Vietnam and also part of $1.1. billion in overall World Bank lending to the country this year, one of the largest recipients of World Bank financing from its facility for poor countries.
Adams said the World Bank stood ready to provide further assistance to Vietnam if the government requested it.
He said if Vietnam sustained strong growth rates of around 7 percent and was able to overcome the current turmoil over the next six to 12 months, a reduction in poverty levels would continue.
Thanhnien
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