The National Financial Supervisory Committee forecasted Vietnam’s balance of payment in 2011 will see a surplus of around $1 billion against the State Bank of Vietnam’s previously forecasted $2.5 billion, the committee’s vice chair Dr Le Xuan Nghia stated at the conference “Vietnam’s financial market and monetary development policy” held on April 23 by HCM City National University.
2011 will be the first year Vietnam may see a surplus from 2008, he noted.
In 2009, the country’s broader measure of payment was reported at a deficit of $9 billion, which was reduced to $3.06 billion last year.
Still, economist Pham Do Chi said that in his estimates, this year the country may suffer a deficit of $3 billion in balance of payment as the State Bank of Bank applied the ceiling rate on deposits and savings in US dollar for which the remittances to be repatriated will enjoy a lower interest rate difference.
“The balance of payment cannot be positive because with a lower US dollar deposit rate, overseas remittances will decrease to $5 billion while the trade deficit may be $12 billion. This year the balance of payment will see a gap of $3 billion”, he marked.
Respond to the economist, Dr Le Xuan Nghia said that the inward remittance to Vietnam last year was $8 billion, of which $4 billion was sent from Vietnamese working in foreign countries; annual overseas remittance is almost $3 billion sustainably and the amount of remittances sent to the country with an aim to enjoy a high interest rate spread is only around $1 billion. “But, recipients will withdraw cash as US dollar interest rate is going down. Actually the US dollar interest rates in other countries remain lower than in Vietnam”, he explained.
The return of more than 10,000 Vietnamese workers from Libya raised the worries about impacts on overseas remittances of 2011, so the committee forecasted that inward remittances to Vietnam will decline modestly to $4.1 billion from $4.3 billion.
He also expressed optimism as saying that forex rate between the dong and the greenback would not change much. Based on nominal forex rate, US dollar is depreciating against other foreign currencies.
“So, in comparison with a basket of major 19 currencies of the countries that have trade relation with Vietnam, a rise in real interest rates will be modest”, Nghia said.