IMF suggests steps to fix Vietnam's 'overheating' economy
The IMF said Friday Vietnam should tighten monetary and fiscal policy to fix its "overheating" economy, which has been battered by double-digit inflation and a widening trade deficit.
The communist government should raise interest rates, cut the budget deficit, improve oversight of the banking sector and push market reforms, said International Monetary Fund (IMF) country chief Benedict Bingham.
The IMF representative was speaking at a twice-yearly meeting between the government and foreign donors, the Consultative Group meet, days after several credit rating agencies downgraded their Vietnam outlook.
"Economic conditions have clearly become more difficult over the past year, with the economy overheating in the context of a weakening global financial environment," Bingham told the meeting in the mountain town of Sapa.
Inflation hit 25 percent year-on-year in May, driven by high global energy and food prices, and the trade deficit, fuelled by a surge of imports, widened to 14.4 billion dollars in the first five months, the government says.