The International Monetary Fund in its recently released report on world economic prospects praises Vietnam’s achievements since the launch of the government’s resolution on controlling inflation, stabilizing the macro economy, and ensuring social security.  With the world economy mired in recession and debts crises in the US and Europe, Vietnam is determined to pursue a tight monetary policy and flexible solutions to achieve targets set for this year and the years to come.

The recession is strongly affecting emerging economies in countries like Vietnam. Like other emerging economies in Asia, Vietnam is facing budget deficits and the effect that public debts has on its long term growth. Exports account for a large proportion of Vietnam’s economy and the increase of goods in the world market will affect Vietnam’s inflation. Doctor Vo Tri Thanh is Deputy Director of the Central Intuitive of Economic Management: “Vietnam is facing with macro instability and high inflation. The country is re-drafting and fine tuning its 5 year plan, under which it aims to balance its macro economy,  restructure stat- owned enterprises, public investment, and other institutions, and  reform the state apparatus and production factor”.

Vietnam is forecast to achieve a growth rate of 5.8% this year

 

In the face of these challenges, the Vietnamese government issued known as resolution No 11 to control inflation, stabilize the macro economy, and ensure social security. Recently, the State Bank of Vietnam has put in place a number of measures to regulate the forex market and contain inflation. The recent reduction of interest rates has helped reduce the public’s concern over high inflation and stabilize the Vietnamese dong. Governor of the State Bank of Vietnam Nguyen Van Binh says: “We have strictly regulated our monetary policies to contain inflation as stated in government resolution No 11. The regulation on the ceiling interest rate of 14% has enabled us to reduce lending interest rates giving facilitating enterprises easier to access to bank loans and easing their difficulties”.

Vietnam is forecast to achieve a growth rate of 5.8% this year and a lower rate next year due to the negative impact of the world economy. As Vietnam is an the integration process, its trade and investment will certainly be affected by the global recession. In such a context, Vietnam aims to balance efforts to contain inflation and achieve its growth target in order to keep the inflation rate at 18% this year, 10% next year and 5 % in the following years. The country has resolutely and flexibly reduced public investment and at the same time mobilized capital from other economic sectors inside and outside the country. Minister of Planning and Investment Bui Quang Vinh says: “While restructuring investment models, we need to open our mechanism more. The State might have to assist enterprises to mobilize their investment and in return, achieve efficiency and transparency. The Ministry of Planning and Investment will instruct the government to add more regulations on public investment”.

Experts say Vietnam is on the right track in reducing inflation and stabilizing the macro economy. The country aims to maintain a tight and flexible monetary policy and improve its social security system to ease the impact economic instability has on the most vulnerable people.