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Managing Capital Flows: The Case of Viet Nam

dc.contributor.authorVo Tri Thanh
dc.contributor.authorPham Chi Quang
dc.description.abstractThanks to reforms and international integration, Viet Nam has recorded impressive economic development achievements. Deepening integration and accession to the WTO has brought about both new opportunities and challenges to a country on its way to accelerating reform and development. The recent surge in capital inflows has led to a financial boom in Viet Nam as well as risks, especially in the context of macroeconomic policy inconsistencies, weaknesses in the banking sector and financial supervision. The macroeconomic policy responses so far (up to February 2008) seem to be less effective in stabilizing the economy and in reducing policy inconsistencies as well as financial risks. The key question for Viet Nam, now, is how to sustain economic growth and sound financial development while mitigating possible financial risks. This paper recommends a broad reform package including tackling the bottlenecks in the economy (the weaknesses of economic institutions, infrastructure, and human resources), modernizing the State Bank of Vietnam (SBV), and strengthening risk management in the banking sector and financial supervision system. The focus is also on capital market development based on improvement of its fundamentals and the reform of large state-owned corporations. In particular, this paper argues for having a firm commitment to combating high inflation and combining tightened monetary policy with a more flexible exchange rate and tightened fiscal policies. The scope and scale of the macropolicy mix should aim to test the market for necessary adjustments rather than create policy shocks. Considering the evident policy inconsistencies, prudential screening and monitoring should be strengthened to prevent speculative financial activities.
dc.publisherAsian Development Bank
dc.rightsCC BY 3.0 IGO
dc.titleManaging Capital Flows: The Case of Viet Nam
dc.typeWorking Papers
dc.subject.expertResults-Based Monitoring And Evaluation
dc.subject.expertPublic Policy Evaluation
dc.subject.expertProject Evaluation & Review Technique
dc.subject.expertOperations Evaluation
dc.subject.expertCorporate Governance Reform
dc.subject.adbPublic Administration
dc.subject.adbInstitutional Framework
dc.subject.adbCorporate Restructuring
dc.subject.adbNeeds assessment
dc.subject.adbProject impact
dc.subject.adbResources evaluation
dc.subject.naturalGrievance procedures
dc.subject.naturalRisk assessment
dc.subject.naturalDecentralization in government
dc.subject.naturalCivil government
dc.subject.naturalPolitical development
dc.subject.naturalSubnational governments
dc.subject.naturalCivil rights
dc.subject.naturalMunicipal government
dc.title.seriesADBI Working Paper Series
dc.contributor.imprintAsian Development Bank
oar.adminregionSoutheast Asia Region
oar.countryViet Nam
oar.authorThanh, Vo Tri
oar.authorQuang, Pham Chi

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  • ADBI Working Papers
    The Asian Development Bank Institute (ADBI) Working Paper series is a continuation of the formerly named Discussion Paper series which began in January 2003. The numbering of the papers continued without interruption or change. ADBI was established in 1997 in Tokyo, Japan, to help build capacity, skills, and knowledge related to poverty reduction and other areas that support long-term growth and competitiveness in developing economies in Asia and the Pacific.

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