Vietnam on Friday denied news reports earlier this week that the country may seek loans from the International Monetary Fund to deal with bad debt in its banking system.
“The government of Vietnam hasn”t had any intention to take loans from the IMF…and doesn”t have any reason to do so,” said State Bank of Vietnam deputy Governor Le Minh Hung in a statement posted on the government”s website.
Hung said Vietnam”s trade balance has improved and its foreign exchange reserves have risen significantly.
“According to the IMF, Vietnam”s macroeconomic situation has positively changed towards stability,” Hung added.
Government data showed late last month Vietnam had a trade deficit of $62 million in the first eight months of this year, narrowing from a deficit of $5.7 billion in the same period last year. prime minister Nguyen Tan Dung was quoted by local media as saying in July that Vietnam”s foreign-exchange reserves were $19 billion at the end of June, up from $9 billion at the end of 2011.
Vietnam has stumbled after years of high inflation, reckless lending and weak planning. Many state-owned enterprises borrowed heavily in a state-driven push to diversify into a range of businesses only to see their finances punctured first by the global financial crisis and then interest costs as the central bank raised rates to try to rein in runaway inflation.
Last month, central bank Governor Nguyen Van Binh told the legislature in a session that the rise is alarming, though not yet a cause for panic. He added the ratio of bad debt in the banking system “is said to be 8.6 percent to 10 percent.”