SBV’s reputation in the market increases: IMF representative in Vietnam

The State Bank of Vietnam (SBV) has watched very closely the macroeconomic evolutions to give appropriate policy measures, resident representative of the International Monetary Fund (IMF) in Vietnam, Sanjay Kalra, said in an interview posted on the central bank’s website recently.

Sanjay Kalra said the central bank’s monetary policy results in the first seven months of the year showed the central bank has watched very closely the evolutions of macroeconomy and on that basis making appropriate policy measures, resulting in the macroeconomic stability as IMF’s expectations.

In Jan-Jul, the forex rate was very stable, inflation has fallen very sharply from above 20 percent in August 2011 to below 5.5 percent in July 2012, and at the same time, the country’s foreign currency reserves have increased significantly in the past seven months.

“These are very good results that the Vietnamese government has achieved in the implementation of the Resolution No 11. Clearly, the central bank has played an important role in achieving these results. People are now more confident in the local greenback. The prestige of the central bank in the market has increased”, Sanjay Kalra said.

Although persisting with the opinion that Vietnam should adjust down the policy rates more slowly, Sanjay Kalra still said IMF satisfied with what Vietnam has achieved.

Regarding targets that the central bank has set in 2012 is to keep inflation at one-digit level, maintain stable exchange rates and try to make sure that the local currency will not depreciate more than 3%, the IMF said that these objectives are consistent.

“However, in the future, the important thing is to maintain the stability that has been achieved in the past seven months. Situations will be very difficult if high inflation returned” he said.

Therefore, the IMF said that in addition to maintaining stable macro-economic conditions, the government should carry out other necessary economic reforms in the banking sector and the business sector, especially state owned enterprises, because the problem now is not macro-economic policies but it is structural issues.

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