HANOI - The International Monetary Fund sees Vietnam's foreign reserves growing steadily this year and next after a sharp drop so long as authorities can maintain economic stability.
Vietnam's international reserves, including gold, would grow to $15.4 billion by the end of 2010 and $19.2 billion next year, from $14.1 billion at the end of 2009, the IMF projected in a report issued in Washington on Wednesday.
The IMF's senior resident representative in Vietnam, Benedict Bingham, said on Thursday the projection was made under "a scenario in which the government continues to preserve the stable macroeconomic conditions prevailing in the second quarter, a scenario in which they also manage to preserve and hopefully build on the confidence that was coming into the dong at that time."
Policymakers have sought to balance growth and stability, checking inflation and a trade deficit, and bringing back some confidence in the dong, which has been devalued three times since November 2009.
The latest devaluation in August showed the fragility of Vietnam's economic stability after it was buffeted by the global crisis.
The IMF report issued in Washington was prepared before the August devaluation.
Bingham said the devaluation "underscored the continued need to consolidate macroeconomic stability and confidence in the dong. That's one of the main messages of the report."
The IMF's reserves projections were based on a definition of foreign exchange reserves used by Vietnam, which is narrower than the one used by the IMF's International Financial Statistics office.
The broader figures estimated gross reserves plus gold at $16.8 billion at the end of 2009.
The IFS this week said March's gross reserves plus gold at $14.2 billion.
By either measure, Vietnam's foreign exchange reserves dropped sharply from 2008 through the middle of this year as foreign currency inflows flagged during the global slowdown and Vietnamese switched to dollars and gold fearing the worst for their own currency.
The closely controlled dong traded for much of the second quarter of 2010 within its 3 percent band and the IMF said reserves grew to $12.9 billion by the end of May. But by July, pressure began to build anew on the currency, which economists and traders said was the result of a surge in dollar demand from loans taken when dong lending rates were high coming due.
Since the August devaluation, the dong has traded near or slightly beyond the weak end of the band.
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