Bluebell Tours RSS

Vietnam news

Travel to China

Mai Chau Tours

IMF says it isn’t in talks with Vietnam on loans 10th June 2008

The International Monetary Fund (IMF) said it isn’t in talks on providing aid to Vietnam after Deutsche Bank AG predicted the country may be forced to seek a financial bailout from the agency.


An “IMF-style program will be needed in the coming months,” Chua Hak Bin, chief Asia strategist for Deutsche Bank Private Wealth Management in Singapore, said in research published last Monday.

Concern is mounting that inflation exceeding 25 percent will hurt confidence in the Vietnamese dong, cutting foreign-exchange reserves and creating economic instability, forcing the country to look abroad for capital, JP Morgan Chase & Co. said in a May 30 note.

Benedict Bingham, the IMF’s senior resident representative in Vietnam, said in a telephone interview last Tuesday from Hanoi, “We have had no discussions with the authorities on an IMF program, and there’s been no indication from the authorities that they would be interested in such a program.

“At this point in time, Vietnam doesn’t need any such financial assistance,’’ Minister of Planning and Investment Vo Hong Phuc said Saturday in Sa Pa Town, northern Vietnam, after a meeting with donors including the World Bank and the IMF.

State Bank of Vietnam deputy governor Nguyen Dong Tien said that any suggestions that Vietnam is currently seeking international financial assistance from the IMF are “not true.” “The government doesn’t think that our current economic situation requires any such assistance yet.”

Forex reserves

IMF loans may be required because Vietnam has insufficient foreign-exchange reserves to withstand a financial crisis, Deutsche Bank’s Chua said in a telephone interview last Tuesday.

Matthew Hildebrandt, an economist at JPMorgan Chase Bank in Singapore, wrote in the May 30 note that a transfer of US$25 billion from the IMF or from one or more Asian central banks is “a possibility.”

The country’s last loan program with the IMF was worth $427 million when it expired in April 2004 with less than half of the total package distributed, after a dispute over the auditing of the central bank.

An improvement in the economy is critical to preventing investors from fleeing dong-denominated assets, JPMorgan said.

Year-on-year inflation rate reached 25.2 percent in May, the highest level since at least 1992, while the trade deficit more than tripled over the first five months of the year.

Morgan Stanley said in a May 28 note that the dong is poised to weaken in a manner similar to Thailand’s baht in 1997 because Vietnam’s current-account deficit may widen this year to an “unsustainably large” 7.5 percent of gross domestic product.

In addition to a “sizeable” dong devaluation, an IMF program may include nationalizing insolvent banks and moving to a more flexible managed exchange-rate system, wrote Chua of Deutsche Bank.

Source: Bloomberg

Ha Long Bay Kayaking Tour

About Bluebell Tours

* Join us for free

Scheduled Tours

Click HERE to save cost and see the best of Vietnam and China with our Scheduled Tours

Scheduled Tours

Æ Trekking Tour in
    Sapa, Vietnam in 4 days

Æ   Trekking holiday in Mai
     Chau Vietnam in 2 days

Æ Cruising Vacation in Ha
    Long Bay, 2 days

Æ Ha Long Bay Kayaking
    tour in 3 days

Fill in this form to create your own trip

Copyright © 2004 - 2008 BLUEBELL TOURS. All rights reserved.