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Vietnam's growth strengthens despite mixed progress on structural reforms: WB

Xinhua, July 20, 2015 Adjust font size:

Vietnam's economic growth has continued to strengthen during the first half of 2015 despite mixed progress on structural reforms, according to the World Bank (WB)'s latest Taking Stock report on Monday.

The WB semi-annual review of the Vietnamese economy said the gross domestic product (GDP) expansion of 6.28 percent was the nation's fastest pace in the first half of the year for the past five years, WB said on its press release issued in Vietnam's capital Hanoi.

Against a backdrop of low inflation, the State Bank of Vietnam (SBV) has gradually loosened monetary policy to spur growth while periodically adjusting the exchange rate to maintain external competitiveness.

At the same time, Vietnam's fiscal accounts emerge as a source of concern. The nation's debt has risen rapidly in recent years, and debt servicing costs could pose an increasing burden on the budget, the report said.

Progress on structural reforms has been less strong, especially regarding state-owned enterprises (SOEs) and the banking sector. " Progress on SOE reform continues, but at gradual pace, with only 29 SOEs equitized in the first quarter of 2015 out of the annual target of 289," WB said.

"Banking sector reforms continued during the first half of 2015, with a number of acquisitions of smaller banks by major state- owned commercial banks," said Sandeep Mahajan, Lead Economist for the World Bank in Vietnam, "However, the lack of an appropriate legal framework and the Vietnam Asset Management Company (VAMC)'s own limited capital base and operational capacity remain constraining factors for resolving bad debts."

VAMC is a one-member limited company, with a registered charter capital of 500 billion Vietnamese dong (roughly 23.6 million U.S. dollars), and is managed, supervised and inspected by the SBV, the country's central bank.

According to WB forecast, Vietnam's GDP growth is expected to reach 6-6.2 percent in 2015.

Taking Stock, the World Bank's review of Vietnam's economic performance, is published twice a year. Endi