The State Bank of Vietnam (SBV) has recently announced figures about the international payment balance in the first quarter (Q1) and Q2 2012 for the first time in accordance with the Circular No 35/2011.
Accordingly, in Q2, the current account balance enjoyed a surplus of $1.4 billion, down nearly 60 percent from the surplus in Q1. Totally, in the first six months of the year, the country’s current account balance surplus reached $4.47 billion.
Current account balance has been improved sharply in the first two quarters of this year mainly thanks to revenue from sales of goods (trade balance surplus of $4.12 billion in H1/2012) and a one-way money transfer from the private sector, including inbound remittances ($4.1 billion).
Previously, according to the statistics from Asian Development Bank (ADB), current account balance deficit has lasted constantly from the second half of 2009 till the first half of 2011. In the last six months of 2011, the current account balance enjoyed a surplus of only nearly $2 billion.
The surplus of the current account shows the cash flows earned from trade activities and one-way international money transfer to offset pretty well for services and payments in foreign-invested sector.
In the first six months of the year, Vietnam has borrowed from foreign credit institutions totalling more than $10.1 billion and paid out $8.4 billion for repayment of principal debts. Foreign institutions have also invested more than $1 billion in valuable papers of Vietnam in the first half of this year while Vietnam has invested only $98 million to purchase valuable papers in foreign countries.
Balance of finance and capital also enjoyed a surplus in Q2 with over $1.44 billion, up 7 percent compared to Q1. Totally, in H1/2012 the balance of finance and capital enjoyed a surplus of $2.78 billion. The surplus in balance of finance and capital was mainly thanks to the proceeds from foreign direct investment (direct investment surplus in the first six months of 2012 reached $3.55 billion).
Basing on the data from the ADB, the balance of capital account has been always in a surplus since the beginning of 2009 so far, but it has decreased gradually from a peak of nearly $12 billion surplus achieved in the last six months of 2009.
Including errors and mistakes of about $1 billion, in the first six months of 2012, the overall balance of payments enjoyed a surplus of $6.45 billion, double against the estimated surplus level for the whole year 2011 and after a deficit of nearly $12 billion in 2009 and 2010.
The increase in overall payment balance surplus is an important factor contributing to price stability and increasing the foreign currency reserves. According to ADB in its updated report on Asia development outlook 2012 recently, this organisation estimated that Vietnam’s foreign currency reserves in Q2/2012 reached about 2.4 months of imports, the highest since 2010 so far.
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