IMF Commenced Vietnam to Further Improve Tax Policy and Administration

Diep Nguyen

14:28 17/07/2019

BizLIVE -

Tax policy and administration include higher environmental taxes, the tightening of government guarantees and lower current spending, which helped reduce public and publicly guaranteed debt.

IMF Commenced Vietnam to Further Improve Tax Policy and Administration

Photo: Independent

In the latest report released on July 16th, IMF gave out some predictions on Vietnam economy and some policy recommendations.
Executive IMF commended the Vietnamese authorities for their prudent policies which have contributed to economic resilience and impressive growth amidst rising trade tensions and external uncertainties. 
IMF welcomed the authorities’ continued commitment to macroeconomic stability and wide-ranging reforms and agreed that policy priorities should continue to focus on building buffers, strengthening governance, and boosting productivity and private sector-led growth.
IMF welcomed the authorities’ fiscal consolidation efforts, especially improvements in tax policy and administration, including higher environmental taxes, the tightening of government guarantees and lower current spending, which helped reduce public and publicly guaranteed debt. 
IMF noted that further consolidation should focus on the quality of adjustment so as to keep the public debt on a declining path and create room for priority infrastructure and social spending, prepare for rapid prospective population aging, and deal with the effects of climate change and digitalization. 
Revenue-enhancing measures should focus on broadening bases, including unifying VAT rates, a property tax, and reducing exemptions and improving tax administration. IMF noted the ongoing efforts to rationalize the public sector wage bill and underscored the need to improve public financial and investment management.
IMF welcomed the current monetary and credit policies stance, especially declining credit growth which is helping Vietnam cement macroeconomic stability. They encouraged the authorities to continue to limit interventions to maintaining orderly market conditions and maintain efforts towards greater exchange rate flexibility while gradually building reserves.
IMF called for reforms to reduce remaining barriers to investment, including improving access to land and credit, that would boost private investment and raise worker productivity and growth. 
IMF looked forward to a well-sequenced modernization of the monetary framework with technical assistance from the Fund. IMF noted ongoing reforms in the financial sector, including the shift of bank business models to lending to households and private firms, accompanied by more prudent aggregate credit growth limits and the deepening of bond and equity markets, which has reduced financial stability risks, improved the quality of financial intermediation and boosted economic growth. 
IMF welcomed the adoption of Basel II standards and encouraged swift recapitalization of the systemic state-owned banks and the construction of a modern macroprudential framework to replace quantitative credit limits and deal with potential financial stability risks.
IMF welcomed the reforms to modernize economic institutions and improve governance. IMF highlighted that priority needs to be given to strengthening anti-corruption legislation further, reforming and improving oversight of state-owned enterprises, implementing Public Investment Management Assessment recommendations, and improving statistical systems and data provision and transparency. 
IMF welcomed the authorities’plan to strengthen the AML/CFT regime and address any related issues to be identified by the forthcoming peer review by the Financial Action Task Force’s Asia Pacific Group.

DIEP NGUYEN

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