Tiểu luận môn tài chính quốc tế the stucture of international balance of payments of vietnam during the period 2010 2015 and meanings of the research problem

Tài quốc tế - Nhóm ts of Vietnam during the period 20 Group Đặng Hải Linh Nguyễn Hữu Bảo Nguyễn Huy Minh Đỗ Thị Mỹ Hạnh Tài quốc tế - Nhóm Đỗ Quang Huy Tài quốc tế - Nhóm A1 Definition   OVERVIEWS The balance of payments, also known as balance of international payments and abbreviated B.O.P., of a country is the record of all economic transactions between the residents of the country and the rest of the world in a particular period (over a quarter of a year or more commonly over a year) According to the Government's Decree No 164/1999 / ND-CP of November 16, 1999 on the management of Vietnam’s international balance of payment, the international BOP is prescribed by a systematic comprehensive balance sheet Set of indicators on transactions between residents and non-residents in a given period Accordingly, the State Bank of Viet Nam was designated as the main chair for the establishment, monitoring and analysis of the BOP Structure of BOP  Trade Balance Tài quốc tế - Nhóm  - - -  - -  It is the difference between exports and imports of items, typically referenced as visible or tangible items In case the exports are higher compared to imports, you will see trade surplus and if imports are more than exports, you will have trade deficit Trade balance shows whether a nation enjoys a surplus or deficit Developing countries usually have trade deficit The trade balance is a part of current account Current Account In the current account, merchandise trade is entered first There are actually a large number of distinct items which belong to the goods category Export receipts are shown on the credit side and the imports are shown on the debit side The second item that is recorded in the current account is invisibles T he current account consists of trade in services, dividends, unilateral receipts, investment income, etc After entering the details, balancing is performed for the current account This balance is referred to as the balance of current account When debits are more than credits deficit occurs Current account surplus will take place when credits are higher than debits Current account balance is extremely important It exhibits a country’s earning and payments in foreign currency A surplus balance improves the country’s financial position It may be utilized for growth and development of the country Capital Account The Capital account includes all the short-term and long-term transactions between a country and the world Usually, these types of flows of money are related to saving and investment, but speculation has turned into a major component of the account in recent times In the capital account, both direct and portfolio foreign investment is recorded External assistance and commercial borrowing are presented net repayment Direct investment identifies the money which moves across national boundaries with the intention of investing in a business Portfolio investment moves across national boundaries with the intention of purchasing shares and bonds The Official reserves means the reserves of gold and foreign exchange kept by the Reserve Bank of India to be used by the government Errors and Omission According to double entry book – keeping concept for every credit, there exists a matching debit and thus, there must be a balance in BOP as well In reality BOP may not balance Once various types of international financial flows are recorded, the statistical discrepancy, referred to as errors and omissions, is also recorded The statistical discrepancy occurs due to complications associated with collecting balance Tài quốc tế - Nhóm  of payments data You can find different sources of data which occasionally differ in their approach Foreign Exchange Reserves Foreign exchange reserves exhibits the reserves that are kept in the form of foreign currencies If the overall balance is surplus, it is moved to the official reserves account which raises the foreign exchange reserves It may be in form of dollar, pound, gold and Special Drawing Rights (SDRs) Impact of balance balances to economic The balance of payments affecting the economy in general and international trade in particular is expressed in the following aspects:  Affecting the exchange rate: - The relationship between balance of payments and exchange rates is reflected by the following simple model: Balance of current account (X – M) + Balance of capital (CI – CO) Balance of official reserves (FXB) + = Balance of payment (BOP) X: export turnover M: import turnover CO: capital outflow FXB: foreign exchange reserves of a country - CI: capital inflow In a fixed-exchange monetary system, governments will ensure the balance of payments, if the balance of payments is disequilibrium, the government will intervene in the money market through foreign currency reserve account • If the sum of the current balance and the capital balance is greater than 0, the domestic currency demand, the government will intervene in the market by selling domestic currency to foreign currency and gold to bring the balance of payments back Tài quốc tế - Nhóm • If the total of the current balance and the capital balance is less than (zero), the government must intervene through the purchase of local currency in foreign currency or gold reserves - In a floating-exchange monetary system, the government has no role in intervening in currency markets The balance of the current balance and the capital account will be established automatically through exchange rate changes  Influence on floating exchange rate management: - Although exchange rates are determined based on market conditions, countries are still trying to maintain their desired exchange rates So most countries have sought to change the market value of a currency by indirect tools instead of direct intervention One of those tools is interest rates - A country that wants to protect its money in the currency market may choose to raise its local currency rate to attract additional external funds This changes market factors and creates a need for additional local currency In the process, governments have entered the currency market to implement solutions to maintain value for money  Impact on economic development: - Although a surplus or deficit of current account can not be said to be good or bad for a country, from a national income perspective, the deficit of current accountmay negatively affect total national product and employment Conversely, the surplus will have a positive effect - Economic development always requires the import of goods and services from the source of foreign currency for export, if the import is larger than the amount of foreign currency earned, the trade balance deficit However, some developing countries need Tài quốc tế - Nhóm to import material and technology that can be used to industrialize and modernize the economy, the "deficit" is a necessity Moreover, from a capital mobility perspective, trade deficit means that the country is establishing long-term credit holders with the rest of the world while only short-term debtors  Impact on foreign currency sources and use of foreign currency funds: The balance of payments of a country is quite adequate for a country's income and money flows All economic and business activities occurring within a country are usually expressed in domestic currency but international transactions are usually expressed in foreign currency, so the deficit or surplus of the balance of payments both affect foreign currency sources and the ability to use foreign currencies and transactions  The source of the debt crisis: The source of foreign currency into a country such as investing and transferring money can make the country's balance of payments surplus, but a major problem is growing foreign debt: • Firstly, your debt is foreign currency debt, of which more than 90% is usually US dollar This debt usually has to be paid both principal and interest from three main sources: (1) Foreign currency earnings from exports; (2) Additional foreign debt for debt repayment; (3) Foreign direct investment However, creditors often want countries to pay off their debt by foreign exchange earnings from exports, but not every country can borrow from it Tài quốc tế - Nhóm • Secondly, global economic crises have exacerbated inflationary pressures and made the developed economies (usually creditors) suffer from currency hardship, which could raise interest rates, offer limited solutions to the borrowing countries that make it difficult for their economic activities THE STRUCTURE OF INTERNATIONAL BALANCE OF PAYMENTS OF VIET NAM DURING THE PERIOD 2010-2015 B- I.Current Balance - - - Balance of trade In 2011-2015, The improved trade balance contributes positively to economic growth and is one of the most important factors in reducing exchange rate pressures and improving overall balance However, the trade deficit rate was mainly due to a slowdown in domestic production (including reduction in imports of manufactured goods, machine, equipment, consumer goods) On exports: In the period 2011-2015, exports of goods have achieved high growth rates, more than three times the GDP growth rate The proportion of Vietnam's exports in total world exports has more than tripled in 15 years from 0.25% in 2001 to 0.8% in 2015, Vietnam agricultural products Although the share of contribution is low, this indicates a greater degree of deepening and widening participation of Vietnam in the world value chain, significantly improving the position of Vietnam in general and Vietnamese goods in particular On imports, the share of imports in total export turnover tends to decrease, contributing to improving the trade balance of Vietnam In the period of 2011-2015, Vietnam's average import increased by 14.36% / year, lower than the two periods (2001-2010) Figure The balance of trade Vietnam 2011-2015 Unit: million USD Tài quốc tế - Nhóm - However, in the period 2011-2015, the improvement of the trade balance is not really sustainable, which is due to: Exports of the FDI sector tended to increase in the structure of imports and exports, indicating the dominance of the FDI sector as well as the difficulties and weaknesses of the domestic sector From 2000 to now, turnover Exports of FDI sector continued to increase with high growth rate, especially after 2008, contributing to strengthening the position of this sector in the total export of Vietnam This is also one of the reasons that the structure of importation by commodity of Vietnam has changed, the proportion of imported raw materials auxiliary materials for FDI sector increased while the proportion of imported goods to the zone The domestic sector continues to decline Figure Structure of Vietnam's exports by sector exports Unit: % Tài quốc tế - Nhóm - The structure of export goods is mainly low-value items Although the share of value of agro-forestry -fishery products, heavy industry and minerals (except for 2012) tends to decrease while the proportion of light industrial products increases, the main export items are High-labor intensive goods such as textiles and garments, footwear, telephones, computers, etc., thus, the actual value added for Vietnam is decreasing Figure The structure of exports by commodity group Unit: % - The export market structure is slowly changing Vietnam's main consumer markets are ASEAN, the United States, Japan and China This increases the dependence of Vietnam 10 Tài quốc tế - Nhóm - on these countries, especially China In the period 2001-2015, the trade deficit between Vietnam and China has increased continuously, with China's trade deficit on China's total exports to China at 13.32% in 2001 and rising Up to 192% by the first nine months of 2015 However, averaging over the 5-year period, it can be seen that this proportion of the period 2011-2015 is lower than in the previous period 2006-2010 and higher than in the 2001-2005 period Specifically, the proportion of China's trade deficit on total exports to China in 2011-2015 is estimated at 161%, 190.41% for 2006-2010 and 52.69% for the period 2001-2005 Balanced service Table Balance of services Vietnam 2009-2014 Unit: million USD - - Năm 2009 2010 2011 2012 2013 2014* Thu 5766 7460 8879 9400 10500 11000 Chi 8178 9921 11859 12500 13200 15000 CCDV -2421 -2461 -2980 -3100 -2700 -4000 So far, Viet Nam's balance of payments has always been in deficit From 2010 up to now, the balance of service deficit has started to increase at a rapid pace and there are signs of concern If the deficit was $ 2.42 billion in 2009, the figure was $ 2.98 billion in 2011, and $ 3.1 billion in 2012, down slightly in 2013, then in 2014 then deficit Reaching a high of $ billion The previous year (2008 pouring) deficit is always less than $ billion The balance of services of Vietnam is always deepening because import of services is always more than export Vietnam is still large trade deficit due to trade deficit in 11 Tài quốc tế - Nhóm transport services, insurance services Despite the trade surplus in tourism but not offset Table Export-import tourism services-transport 2010-2014 (billions of USD) Unit: billion USD Xuất - - - Nhập Du lịch Vận tải Du lịch Vận tải 2010 4,45 2,3 1,47 2011 5,62 2,5 1,71 8,22 2012 6,6 2,1 8,7 2013 7,5 2,2 - - 2014 7,3 - - 8,1 According to GSO statistics, service exports in 2014 reached $ 11 billion, increase 2.8%, of which tourism services reached US $ 7.3 billion, accounting for 66% of total turnover and did not change much compared to In the previous year, service import reached $ 15 billion, up 5.6%, of which transport and insurance services accounted for $ 8.1 billion, accounting for 5.4% of total turnover and up 12.6% The case for 2014 is about $ billion and has been on the rise in recent years mainly due to imports of transport services as imports from abroad are still in the mainstream When Vietnam undertook commitments to open services markets within the framework of the WTO and the ASEAN Community from 2015 and the Pacific Economic Partnership Agreement TPP in the near future In terms of exports of travel services (transport, telecommunications, insurance, government services and other services), tourism services exports increased with highest speed at 16% half of the corresponding increase in total exports of services Tourism services account for the largest share of total service exports and are constantly increasing (in 2005, 53.9% in 2005, 71.7% in 2005, 59.7% in 2013) The proportion of export turnover in total exports of goods and services is low and decreased from 9.4% in 2010 to 7.7% in 2012 and 7.4% in 2013 Export turnover ratio Services on GDP by service sector are low and fall to 19.7% in 2015 to 17.8% in 2010 12 Tài quốc tế - Nhóm - and 14.2% in 2013 This rate in 2013 of service exports is low and far from the export of goods to GDP 77.1% The propotion of exports of transport services in total service exports was completed and dropped rapidly from 30.9% in 2010 to 25.6% in 2011, to 21.5% in 2012 and into 20.9% in 2013 II Capital Account  Foreign Direct Investment : - -  According to statistics of the Foreign Investment Department (Ministry of Planning and Investment), as of 20.12.2016, both countries have 22 509 valid projects with a total registered capital of 293.25 billion close USD Implementation of capital accumulated FDI projects estimated at more than US $ 154.54 billion (roughly 53% of total registered capital in force) FDI was invested in 19 of 21 sectors, including industrial sectors processing and manufacturing accounting for the largest proportion (58.8% accounted for the total registered capital), business real estate ranked second (17.7% of the registered capital) There are 116 countries and territories have invested in Vietnam, of which South Korea is the largest investor with 5,747 valid projects, the total registered capital of over US $ 50.7 billion (representing 17.3% of total investment); 2nd Japan with 3,280 valid projects, the total registered capital of over 42 billion dollars (14.3% of total investment) Now, FDI has been present throughout the 63 provinces and cities across the country, focusing mainly in the key areas, have advantages Ranked by size of capital, Ho Chi Minh City 6737 project led to valid, registered capital of 44.82 billion US dollars, accounting for 15.3% of total registered capital of the country; second is the Ba Ria Vung Tau 342 projects with registered capital of US $ 26.86 billion, accounting for 9.2% of the total registered capital of the country; ranked third with 3,035 projects in Binh Duong, the registered capital of 26.96 billion US dollars, accounting for 9.1% FDI has brought positive value to the economy, as indicated in the following points: First, promote economic growth 13 Tài quốc tế - Nhóm • Looking at Figure you can see the trend movement of the rate of economic growth and total FDI in Vietnam implemented basically in phase with each other Only in 2008 while FDI implemented capital increase but due to inflation policy of the Government and the global economic downturn, should economic growth rate fell sharply compared to 2007 On the long term, we I can confirm that FDI is one of the important factors affecting the economic growth potential of Vietnam Figure Relationship between GDP growth and total realized capital On the other hand, the contribution rate of FDI in GDP in the region is higher than the previous year If in 1992, the rate was 2%, but in 2005 was about 15%, is above 17% in 2015 This confirms the position, the role of FDI in the national economy FDI sector also contributed significantly to revenues with increasing values Period 1994-2000 is $ 1.8 billion, rising to $ 14.2 billion in 2001-2010 and 23.7 billion in 2011-2015 Second, promote the restructuring of the economy towards modern • FDI is an important factor promoting the development of many industries and new products, generating over 50% of industrial production, contributing to the formation some key industrial sectors of the economy, such as oil and gas, electronics, information technology, steel, cement increasing the production capacity of the national economy due to the economic structure more progressive •  14 Tài quốc tế - Nhóm FDI also contributes to certain on restructuring agriculture, diversification of products, enhance the value of agricultural goods exported and absorb some of the advanced technology, plant varieties, the yield quality high • FDI enterprises have focused investments in some important sectors in agriculture and rural areas, such as processing of agricultural products after harvesting, processing and animal feed, create more new products and increasing competitiveness of agricultural products • In the services sector, FDI appears many new services are of high quality, such as banking, insurance, auditing, shipping, logistics, hotels, offices, apartments for rent some industry international standards, gradually facilitate market development services and increased international economic integration Third, increase the scale of investment capital for the economy • With Vietnam, are in the process of promoting industrialization and modernization, the demand for capital of the national economy is very large, FDI supplements a significant portion needs Reality in Vietnam showed that FDI plays an important role, as shown by the total capital investment in the development of this area is increasing (Figure 2) •  Figure Percentage of FDI in total social investment capital (current prices) • In 2011-2015, the FDI sector contributed over 22% of total social investment capital However, while FDI is external force is important for the process of investment development of the national economy, but to note if we use would 15 Tài quốc tế - Nhóm   effectively negative impact on planning, as imbalances in investment structure, regional structure, which can pollute the environment and absorb the backward technology Fourth, improve the technological level • Improve the technological level of FDI is considered as an important channel to develop the technological capacity of the country receiving the investment Through FDI, Vietnam has access to the advanced technology of the world to develop the economic sector using modern technologies, such as precision engineering, electronics, software industry, postal - telecommunications, biotechnology • FDI is contributing to the rapid development of export processing zones, Industrial Zone with advanced technological level Many new and modern technology was transferred through FDI activity, creating an important landmark in the development of some key economic sector of the country Fifth, promote export, expanding external relations and enhance economic integration International • In recent years, exports of regional FDI has "turn" their sales to customers of Vietnam, promote national brands, became the "bridge", is a good condition to Vietnam quickly approaching and conducted cooperation with many countries, international organizations, the economic center, engineering and technology in the world, gradually improve the position and strength of our country in the context of globalization Figure The value of merchandise exports FDI 16 Tài quốc tế - Nhóm Non-oil and rice, no exports exceeding US $ 100 million / year When FDI enterprises in Vietnam went into the development phase, the rate of export growth of this sector has contributed to the export growth of the whole country From 1991 to 1995 exports of FDI reached US $ 1.12 billion, coming in 1996-2000 reached $ 10.6 billion, up more than times higher than years ago and accounted for 23% of exports country In the 2011-2015 period, also continued to increase, in 2015 reached nearly 80 billion US dollars and 67.4% of total export turnover of the country By exports from FDI, the trade balance is not only improved, but also generate a trade surplus in recent years Sixth, improve the quality of human resources • Employed workers in FDI enterprises is increasing, if in 1990 the percentage of workers in this sector accounted for only 0.04% of the workforce across the country, then by 2007 the rate was 1.6% In 2010, FDI has attracted over 1.7 million direct employees, including direct employees working in the industrial sector accounted for nearly 80%, in 2015 2.2 million workers, accounting for 4, 2% over the whole country In addition, FDI also creates jobs for about 2.5 million workers indirectly FDI is considered a pioneer in in-house training and external training, raising the level of workers, technicians, managers Part of which has the capacity to manage, the scientific, technological substitution enough foreign experts including direct employees working in the industrial sector accounted for nearly 80%, in 2015 2.2 million people, accounting for 4.2% of the whole country •  17 Tài quốc tế - Nhóm • In addition, FDI also creates jobs for about 2.5 million workers indirectly FDI is considered a pioneer in in-house training and external training, raising the level of workers, technicians, managers Part of which has the capacity to manage, the scientific, technological substitution enough foreign experts including direct employees working in the industrial sector accounted for nearly 80%, in 2015 2.2 million people, accounting for 4.2% of the whole country In addition, FDI also creates jobs for about 2.5 million workers indirectly FDI is considered a pioneer in in-house training and external training, raising the level of workers, technicians, managers Part of which has the capacity to manage, the scientific, technological substitution enough foreign experts Long & Medium-term loans Situation of ODA attraction in period of 2010-2014 - Total ODA disbursement by the end of 2014 is expected to reach $ 48.23 billion, accounting for 69.71% of total signed ODA In the past two years, thanks to the high determination of the Government, the efforts of various sectors at all levels and donors, disbursement of some large donors such as Japan, the World Bank, has had great progress: Japan's disbursement rate in Vietnam in 2011 ranked second and in 2012 ranked first worldwide; WB's disbursement rate in Vietnam increased from 13% in 2011 to 19% in 2012 - Results of ODA commitments, signing and disbursement in 2011-2014: 18 Tài quốc tế - Nhóm    Commitment: $ 20,872.77 million Signing: $ 23,436.63 million Disbursement: $ 18,470 million Over the years, the commitment, signing and disbursement levels have made certain progress, increasing gradually over the years However, in the 2011-2014 period, the amount of commitments is lower than that in 2006-2010 period, but the number of contracts is higher than in 2006-2010 and higher than the commitments in the same period This represents the great efforts of Vietnam and the donors to improve and harmonize processes, procedures, institutional refinement, and capacity improvement at all stages of resource mobilization (Project documents; expertise and approve projects,negotiate and conclude the agreement; organize, manage and implement the project) as well as the donors belief in Vietnam The share of borrowings in total ODA tends to increase from 80% (1993 - 2000) to 81% (2001-2005), 93% (2006-2010) and now stands at 96% (2011 - 2014) III - - OUTSTANDING RESULT ON EXCHANGE RATE FOR THE PERIOD 2011 – 2015 Active, flexible in exchange rate stability In implementation of the Government's Resolution No 02 / NQ-CP dated 09/02/2011 on the major solutions to guide and administer the implementation of the 2011 socioeconomic development plan, the SBV issued the Decision 230 / QD-NHNN dated 11/2/2011 adjusted the average interbank exchange rate to 20,693 VND, up 9.3% compared to 18,932 VND before, and narrowing the trading band from ± 3% down ± 1%; Promulgated Circular No 07 / TT-NHNN dated March 24, 2011 to narrow the subjects of foreign currency lending by credit institutions (CIs) to borrowers being residents Following this, the SBV issued a series of documents to lower the US $ deposit interest rate ceiling rate from 6% per annum to 2% per annum, increasing the compulsory reserve requirement for CIs by 2% to 6% Expanding the state-owned enterprises to sell foreign currencies to credit institutions, gradually moving the domestic foreign currency mobilization and lending relations of credit institutions to foreign currency trading and dealing with foreign currency transactions Legally on the free market 19 Tài quốc tế - Nhóm - - - - - With the drastic measures of the SBV mentioned above, the foreign currency market has gradually stabilized, exchange rate tensions have been pushed back At the end of 2011, the official exchange rate increased only by 10.01% y / y and stood at VND20,828 The exchange rate quoted by commercial banks was relatively stable and was in the range of Permission, foreign exchange status of commercial banks improved; The trade deficit was reduced sharply and was only 10.4% of export value, much lower than the 18% proposed, with the overall balance of payment surplus of USD 3.1 billion, compared to the deficit $ 3.07 billion in 2010 Price stabilization, market support Promoting the results achieved in 2013, the SBV has set the goal of stabilizing the exchange rate in 2014 within ± 2%, combining exchange rate and interest rate policy At the same time, closely watching the developments in the foreign currency market and the international payment balance, continue to reduce interest rates on USD deposits and average interbank exchange rates in line with changes in foreign currency supply and demand On the market, ensure the foreign exchange market works smoothly In the context of slow credit growth, the SBV loosened foreign currency borrowers under the Government's policy, focused on the priority areas and ability to balance foreign currencies of commercial banks With interest rates less than 4-5% per annum over VND loans, businesses can access cheap credit, helping to reduce costs in finding new alternative markets to reduce dependency Into the Chinese market Due to the high foreign currency credit, the USD selling price was maintained at a high level, along with the expectation of the possibility that the SBV will adjust the exchange rate soon after the Governor's message and the exchange rate policy direction In 2014, the SBV decided to raise the official exchange rate by 1% to 21,246 VND / USD, effective from 19 June 2014 The decision to adjust the exchange rate by 1% has contributed to stabilizing the market and supporting exports in the last months of the year, thereby supporting economic growth Stepping on to 2015 is a turbulent and challenging year for the management of monetary policy in general and the exchange rate policy in particular in the context of the continuous appreciation of the USD due to the expectation of the Federal Reserve to raise interest rates And China suddenly adjusted strongly the exchange rate of the Chinese Yuan, which led to a sharp drop in the currencies of Vietnam's major trading partners In Vietnam, raising large government bonds to offset the unsuccessful budget deficit has pushed up government bond yields, putting double-pressure on the money 20 Tài quốc tế - Nhóm - - - market: Short term interest rates are rising in the long run, which indirectly hinders the goal of further lowering lending rates and stabilizing the exchange rate Faced with that situation, the SBV has been very active and flexible in executing to come up with suitable solutions to the new conditions and situation In fact, just after the central bank unexpectedly devalued the renminbi on Aug 11, on August 12th, the SBV flexibly and promptly adjusted the exchange rate band between VND and USD from +/- 1% to +/- 2% Then continue to actively lead the market, eliminate the psychological expectations, anticipated the adverse impact of the Fed's ability to raise interest rates and fluctuations in the world financial markets, on August 19, The SBV adjusted the average interbank exchange rate between VND and USD by 1% and widened the exchange band from +/- 2% to +/- 3% Adjustment has also been clearly communicated to the market to explain why the adjustment was aimed at neutralizing and protecting the economy from external shocks As a result, the market welcomes this move, international financial and monetary institutions (IMF, WB), international banks (HSBC, ANZ, Standard Chartered, Citibank, etc) Appreciated is the "initiative", "necessary", "quick" and "timely" responses Exchange rates and foreign exchange markets have quickly stabilized, market sentiment has cleared With the active and flexible exchange rates, the exchange rate and the foreign currency market in this period have been more stable than in the previous period, the exchange rates of commercial banks fluctuated flexibly in the amplitude allow The foreign currency liquidity of the entire banking system in Vietnam has been improved, the confidence in the value of the dong has been strengthened, and the "dollarization" situation has drastically reduced Credit institutions tend to buy foreign currencies from customers And sold to the SBV, the balance of payments improved gradually and was surging at a high level The SBV bought a large amount of foreign currency to increase the State's foreign exchange reserves C- MEANINGS OF THE RESEARCH PROBLEMS Capture the situation of export and import of that country in a year 21 Tài quốc tế - Nhóm The international balance of payments helps us to assess the flow of foreign currency in or out of a country with other countries in the world, show the economic relationship between the two countries together Analysis the imbalance of balance of payments - Affect to foreign currency sources and using foreign currency funds: The balance of payments of a country expresses quite fully country’s income and money flow All economic and business activities of a country usually expressed in local currency but international transactions are usually expressed in foreign currency, so the deficit or surplus of the balance of payments affect to foreign currency sources and the abilities of using foreign currencies and transactions - Affect to the economic growth: Not only affect to exchange rate, it also affect to the economic growth Although the surplus or current account deficit can not be said to be good or bad for a country, but from a GNI ( Gross National income ), the deficit of balance of current account can have bad affect to GNP ( Gross National Product) and jobs Reserve that, surplus has good affects - Economic growth always requires the import of good and services from foreign currency source export, if the import is greater than the amount of foreign exchange earned, balance of trade deficit However, some developing countries need to import production material, technology to be able to industrialize and modernize the economy so the deficit is necessary Further, from a capital mobility perspective, deficit of balance of trade means the country is establishing a long-term net pure creditor position with other countries in the world while only being a short-term debtor - The source of the debt crisis: The source of foreign currency into a country such as investment, money transfers can make the country's balance of payments surplus, but a major problem is growing foreign debt Despite the many factors that emerging foreign debt crisis, but in terms of balance of payments, two fundamental issues are often mentioned  First, the foreign debt usually be paid capital and interest from sources: (1): Foreign income from export (2) Addition foreign debt to payments 22 Tài quốc tế - Nhóm  (3) foreign investment However, Creditors usually expect countries to pay debt by (1) but not any coutries can increase export from that capital Second, global economic crises have increased inflationary pressures and made the developed economies (often creditors) suffer from monetary difficulties that could raise interest rates, offer solutions to limited the borrowing countries that make it difficult for their economic activities Adjust the balance of payments: - In the currency system under the fixed exchange rate regime, governments will ensure the balance of payments, if the balance of payments is disequilibrium, the government will intervene through foreign currency account If the total of balance of current and balance of capital bigger than zero, the government will intervene in the market by selling the local currency to foreign currencies and gold, making the balance of payments return to normal If the total of balance of current and balance of capital is less than zero, the government must intervene through the purchase of local currency in foreign currency or gold reserves Clearly, the government of the nation maintains a balance of foreign exchange reserves are important, so they can timely intervention in the currency market in order to maintain exchange rate stability in order to stabilize national economic and trade activities - Although exchange rates are determined based on market conditions, countries try to maintain exchange rates as desired So most countries have sought to change the market value of a currency by indirect instead of direct intervention One of those tools is interest rates A country wishing to protect its currency in the money market may choose to raise local currency rate to attract additional external funds This changes market factors and creates a need for additional local currency In the process, governments have entered the currency market to implement solutions to maintain value for money Graph the economic situation in Vietnam and analyze the factors affecting the current account of Vietnam 23 Tài quốc tế - Nhóm - The current account is a major part of the international balance of payments; it records international trade in goods and services; Net income and transfers from abroad; And is one of the key indicators for assessing the behavior of future of the economy According to the interim approach, the current balance reflects the difference between domestic savings and investment The current account deficit means that domestic savings are not sufficiently large to invest in the country, requiring the attraction of external sources such as FDI, remittances or foreign loans With a high growth economy and at an early stage of development like Vietnam now, the current account deficit is understandable Even in some respects, it is necessary for Vietnam to make use of external capital to develop its economy - The current account deficit may affect a country's solvency, potentially high risks and adverse effects on the economy This effect can occur as a shock to the external balance of the economy in two forms:  The currency crisis is accompanied by a sharp depreciation of the domestic currency or the depreciation of foreign currency reserves  Foreign debt crisis, in the form of insolvency of foreign debt or the inability to borrow foreign debt  A persistent of the balance of current deficit, if not funded by the balance of capital surplus, would lead to a deficit in the balance of payments, putting downward pressure on the domestic currency 24 ... difficult for their economic activities THE STRUCTURE OF INTERNATIONAL BALANCE OF PAYMENTS OF VIET NAM DURING THE PERIOD 2010- 2015 B- I.Current Balance - - - Balance of trade In 2011 -2015, The improved... lower than the two periods (2001 -2010) Figure The balance of trade Vietnam 2011 -2015 Unit: million USD Tài quốc tế - Nhóm - However, in the period 2011 -2015, the improvement of the trade balance. .. reserves C- MEANINGS OF THE RESEARCH PROBLEMS Capture the situation of export and import of that country in a year 21 Tài quốc tế - Nhóm The international balance of payments helps us to assess the flow