• by IPS Correspondents (washington)
• Friday, November 11, 1994
• Inter Press Service

WASHINGTON, Nov 11 (IPS) - The International Monetary Fund (IMF) Friday approved 535 million dollars in new loans to Vietnam to support its economic reform programme over the next three years.

The loans will be made available in semi-annual installments of about 79 million dollars, the first of which will be made available immediately, according to the IMF.

Announcement of the new credits is the latest in a series of loans by multilateral financial and development agencies since October, 1993, when Vietnam regained its eligibility to borrow from them after a 14-year hiatus.

In September, the World Bank announced that it plans to lend at least 400 million dollars to support irrigation, energy, and banking reform projects over the next several months.

During the past year, the Bank approved some 325 million dollars in credits to Vietnam, while the Asia Development Bank (ADB) has approved somewhat less.

The growth rate of Vietnam's economy, which some western bankers and investors believe could be Asia's next "tiger", will reach almost nine percent this year, according to the IMF which predicted an eight percent clip for 1995.

Flooding this year resulted in higher prices for some staple foods, so that inflation is projected at 10.5 percent for the year -- up from 5.2 percent last year. But that is expected to come down to seven percent next year, according to the IMF.

In reviewing Vietnam's economy, the Fund said it had undergone "a remarkable transformation since 1986" from a centrally- planned to a broadly market-based system.

Both the Fund and the Bank had wanted to resume lending to Vietnam in the late 1980s but were prevented from doing so by a de facto U.S. veto on the two agencies' executive boards.

The IMF noted that vitually all price controls have now been lifted and a unified exchange rate mechanism adopted. Private property rights have also been recognised, it said.

The country's economic performance since the IMF extended a 178 million dollar standby loan in October, 1993, has been "encouraging", the Fund said.

The reform programme which will be supported by the IMF's new loan will include changes in the tax system, further liberalisation in the trade regime, the introduction of a treasury- bill auction, and establishment of an interbank market in foreign exchange.

© Inter Press Service (2014) — All Rights Reserved. Original source: Inter Press Service

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