Deputy Prime Minister Nguyen Sinh Hung made the statement while delivering a government report at the current session of the National Assembly in Hanoi on May 20.

Mr Hung said that the global financial crisis and economic recession had a direct impact on the national economy, causing production and business to come to a standstill and affecting workers’ employment, incomes and daily lives. The government introduced urgent solutions to cushion the impact and fulfilled 3 major targets set for the year. Accordingly, Vietnam reined in galloping inflation and stabilised the macro economy, maintained steady economic growth, and ensured social welfare.

Mr Hung said that with these solutions put in place, the national economy overcame difficult times and showed signs of recovery in the first quarter of this year. It grew by 3.1 percent and could continue to grow in the following months. Industrial production achieved a 2.1 percent growth rate and the figure jumped to 5.4 percent in April. More than 15,000 businesses were licensed to operate in the review period, up 22 percent against the same period last year.

To effect these positive changes, Mr Hung said that “the government kept a close watch on the situation and consulted the Political Bureau, the Party Central Committee and the National Assembly Standing Committee in a timely manner to go ahead with comprehensive solutions and policies aimed at meeting targets set for 2009.”

At the same time, he said, “the government introduced drastic early measures to ride out the global financial storm and improve people’s living conditions.”

However, the Deputy PM acknowledged that the global economic and financial turmoil is forecast to continue to exert more negative effects on the national economy in 2009 and that Vietnam should not be too optimistic about what it has achieved in the past months.

Mr Hung said the government showed its resolve to reverse the economic downturn and maintain steady growth by introducing five major tasks as follows:

(1)     effectively carrying out investment and spending stimulus packages

(2)     boosting production and business, developing the domestic market, and expanding outlets overseas

(3)     shifting the implementation of a tight financial and monetary policy to a ‘pro-active’ and ‘flexible’ financial and monetary policy, ensuring the macro-economic stability, stimulating growth and preventing the return of inflation. The government proposed that the National Assembly continue with adjustments to tax policies to mobilise resources from the people.

(4)     caring for people’s lives, boosting poverty reduction and generating employment.

(5)     last but not least, keeping a close watch on the situation, increasing its governance and creating public consensus to successfully implement tasks for 2009.

According to Mr Hung, the government recommended that the National Assembly adjust the country’s target for GDP growth down to 5 percent from 6.5 percent as set previously. The projected budget deficit will also be adjusted up to less than 8 percent of the GDP from the set target of 4.82 percent.

The government also proposed issuing additional bonds worth VND20,000 billion and amending several tax policies and other policies relating to capital construction investment and bidding.

“The government is determined to increase its management capability to better implement National Assembly resolutions so as to fulfil socio-economic development and budgetary plans for 2009 to the maximum possible,” said Mr Hung.