Hanoi (VNA) – Vietnamis on the right track in accelerating its decisive economic reform, but an upgrade is needed to meet the government's aspirationsof sustained, inclusive, and green growth, said an expert from the International Monetary Fund (IMF).

According to Era Dabla-Norris, head of the IMF’sArticle IV Consultation of the Department of Asia-Pacific, one of the most important challenges holding backproductivity and hindering an efficient allocation of resources is the pervasiveeconomic differences across firms, sectors, and workers.

Tackling these issues requires structural reforms to improve the businessenvironment, enhance productivity, and boost potential growth, includingpolicies to ensure a level playing field, particularly for small- andmedium-sized enterprises, that supports firm and labour formalisation, spurstechnology diffusion from foreign direct investment to domestic firms, andreduces labour skill-mismatches, Dabla-Norris was quoted by Dau tu (Investment Review) as saying.

Besides, improving economic institutions, reducing corruption,promoting digital transformation, and greening the economy are other importantareas of reform that Vietnam should tackle to achieve its economic ambitionsgoing forward, she said, adding that medium-term growth prospects will depend critically on decisivereform implementation.

The IMF official added that themedium-term growth outlook will depend heavily on how reform is performed.

According to the expert, the bulk of thefiscal stimulus under the socio-economic recovery and development programme of Vietnam - especially in the field of public investment   – isexpected to play out in 2023 and this will further boost economic activity next year.

The data on activity in the second quarterof 2022 points to a much stronger, more frontloaded recovery than anticipatedon both the domestic and external fronts, she said.

The programme, to be executed over 2022-2023, includes a wide range ofpolicies, from near-term fiscal measures such as temporary tax reliefs,interest rate subsidies, and liquidity support for firms and households, tolonger-term policies that include spending on healthcare, education, digitaland physical infrastructure.

The package is well suited to entrench the recovery after the large economicshock in the second half of 2021, she noted.

If implemented effectively, the programme will spur infrastructure investment,and create momentum for reforms in areas under its agenda, such as climatechange, digital transformation, innovation, financial inclusion, businessclimate, education, and the labour market, she noted.

These will play a critical role in limiting economic scarring – partiallycompensating for slower capital accumulation during the pandemic – and canboost productivity, she added.

The IMF lowered its growth forecast for the global economythis year, but believed Vietnam’s recovery will be boosted by theimplementation of its socio-economic development and recovery programme.

Francois Painchaud, IMF Representative in Vietnam, recently has projected that the country's GDP will grow at 6% in 2022 and 7.2% in 2023.

Meanwhile, the Asian Development Bank (ADB) forecast thatVietnam's economic growth will recover to 6.5% in 2022 and reach 6.7% in 2023./.