[governance-vn] Seven-point plan to ease inflation

[Vern Weitzel]

http://www.nhandan.com.vn/english/business/310308/business_se.htm

Last updated: 17:48 - March 31, 2008


Seven-point plan to ease inflation

Curbing inflation is a task that exacts a price, said Prime Minister Nguyen Tan 
Dung.

In an article published on the Vietnamese Government website, the Prime Minister 
analysed the reasons for the current high levels of inflation and elaborated on 
Government measures to curb inflation and maintain economic growth.

To control inflation would require concerted efforts by Government management 
agencies and authorities at all levels, he said.

In a recent meeting, the Government defined key tasks in curbing inflation, 
maintaining macro-economic development, and ensuring social welfare and 
sustainable growth.

To achieve the targets, the Government proposed 7 measures:

First, the Government would further tighten monetary policy. The constant 
increase of the money supply in circulation and outstanding loans dating from 
2004 were major reasons for high inflation.

The Government began to closely control payment and loans earlier this year. 
Tightening monetary policy, however, should ensure the economy’s liquidity and 
the operation of banks and credit institutions. It should also create conditions 
for domestic production and export activities.

Second, the Government should cut expenses and public investment relying on the 
State Budget, and it will strictly control investment in State-owned enterprises 
so as to reduce the deficit and contribute to the economy’s development. 
Ministries and chairmen of provincial People’s Committees were asked to strictly 
monitor investment by State-owned enterprises and terminate ineffective 
construction works.

Third, development of agriculture and industry would take priority so as to 
overcome consequences resulting from inclement weather and epidemics and to 
increase food productivity. Production development was key to increasing the 
supply available for in-country use and export, curbing inflation and decreasing 
the trade deficit without side effects.

Fourth, supply and demand of goods must be ensured to promote exports and reduce 
the trade deficit. Balancing the supply and demand of goods, especially 
essential goods for production and living, was necessary to prevent sudden price 
changes and speculation.

The stabilise domestic production, the Government would not increase fuel and 
petrol prices before June this year and would reduce some fees for farmers.

To ensure food security, the Government decided that the total rice export 
volume should be 4 million tonnes this year.

The Government has applied a flexible exchange rate with an appropriate band 
which should help curb inflation without affecting exports. Additionally, the 
Government asked that exports increase and imports decrease to balance trade.

Fifth, thrift in production and consumption was encouraged. Government and State 
offices were called to cut 10%. Businesses must re-check expenses to reduce 
prices and people are encouraged to save fuel and energy in their day-to-day living.

Sixth, market management should be further supervised to avoid price 
speculation, especially in regards to essential items such as petrol, cement, 
steel, medicines and foods. Cross-border smuggling should be immediately stopped.

Finally, to help people, especially the poor, survive the price severe rises, 
the Government will implement social welfare policies and increase salary and 
allowances.