Government measures to improve the financial situation
Deputy Prime Minister Nguyen Sinh Hung has said that the Government will apply many solutions in order to attempt to decrease the rate of inflation to less than ten.
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At the opening ceremony of the first session of the 13th National Assembly (NA), Deputy Prime Minister Nguyen Sinh Hung presented a report on the socio-economic situation and the State budget in the first half of this year. His report also outlined potential solutions for the second half of 2011.
Mr. Hung said that in the first half of this year the country’s economy faced a number of difficulties and challenges. The complicated world economy was most to blame, making the country’s GDP slow down, inflation and interest rates rise and foreign currency reserves decline sharply.
Overcoming difficulties
To cope with unfavourable conditions both domestically and internationally, the Government issued the Resolution 11 to curb inflation, stabilise macroeconomy and ensure social welfare.
Mr. Hung reported that the country’s GDP is estimated to reach 5.57 percent in the first half of this year - lower than both the same period last year and the target for 2011 which was approved by the NA. This is attributed to the great effort of the whole country, particularly in industrial, agricultural, tourism and services sectors which achieved high growth.
Total export value is estimated to hit US$42.33 billion in the review period, up 30.3 percent and triple the target set by the NA of 10 percent. Trade deficit is equal to 15.72 percent of total export value. Ministries and departments comprehensively implemented solutions to stimulate exports and reduce imports in order to limit the trade deficit to less than 10 percent of total export value in 2011.
The budget collection in the first half of this year yielded around VND327.8 trillion, equal to 55.1 percent of this year’s estimates. Total budget spending was VND355.6 trillion, equal to 49 percent of estimates.
After strictly adhering to a plan to save 10 percent of regular spending, VND80.55 trillion worth of investment capital had been cut down by the end of May.
Implementing solutions to curb inflation
Mr. Hung stated that in order to obtain a growth rate of 6 percent this year the Government must ensure necessary resources to fulfill targets for social welfare and job generation. This, he said, would then create a foundation to potentially achieve a growth rate of 6.5 percent in 2012 and following years.
He emphasized that the Government must strictly direct the implementation of solutions to curb inflation in order to control CPI at a rate of 15-17 percent this year. The Government also set targets for raising total payment method of 15-16 percent, controlling the trade deficit at a rate of 15-16 percent of total export value, and reducing budget overspending to below 5 percent of GDP.
To fulfill the set targets for the remainder of this year, the Government will continue to implement a cautious monetary policy. This includes maintaining credit growth at a level in line with market movement and effectively using monetary policies and tools to reduce inflation rate and interest rates. These methods are designed to assist production and ensure payment of the credit, banking and economic systems.
The Government will also improve the supervision and the inspection of bad debt and focus on investment in production, exports, agriculture, rural development and small to medium-sized enterprises.
As well as this, the Government will consistently combine the tightened fiscal policy with a cautious, more effective monetary policy which aims to reduce total demand and inflation rate in 2011 and 2012, Mr. Hung said.
The Government will continue to carry out solutions to improve budget collection measures and tighten its belt in order to lower budget overspending. They also plan to cut State investment capital for ineffective projects and focus investment on social welfare, poverty reduction, disaster prevention projects as well as strictly supervising the State-owned enterprises’ investment.
It will also strictly control the goods and services market to ensure a balance between supply and demand of essential products and services. Managing electricity, petroleum and coal prices in line with market standards are other key solutions in the struggle to curb inflation and ensure social welfare.