Inflation to be kept at 18 percent this year

The 18-percent target will not be met unless effective solutions are put in place, PM Dung told a regular monthly Cabinet meeting in Hanoi on November 4.

He said an increase in the purchasing power in November and December is likely to drive up the consumer price index, making it more difficult for relevant agencies in their attempts to curb inflation down to a single digit rate in 2012. According to the Government leader, priority will still be given to reining in high inflation.

The PM also asked ministries, agencies and localities to iron out snags to help businesses maintain and expand production. He said credit allocations should be focused on agricultural production, rural development and exports, especially farm product processing.

To do this, he said, the central bank must keep a close watch on money circulation, the foreign exchange and interest rates to control inflation and maintain growth. The Ministry of Industry and Trade must work closely with relevant ministries and localities to ensure an adequate supply of commodities, particularly basic necessities such as food and foodstuff, on the market.

The PM asked ministries, sectors and localities to cut down on public investments and mobilise other sources of capital for projects while improving the quality of investments.

He urged them to finalise and submit to the government a detailed plan on restructuring the State-owned enterprises (SOEs) to improve the operational efficiency of SOEs, notably economic groups and State corporations.

He also reminded them to submit a bank restructuring plan to overcome weaknesses of the banking system and strengthen People’s Credit Funds.

The central bank must work hard to ensure that there is no bankruptcy and depositors’ interests are safeguarded, said the Government leader.

He also called for more efforts to assist flood victims, speed up poverty reduction programmes, and control the foot-and-mouth disease.

It was reported at the meeting that Vietnam has made encouraging achievements in the past 10 months, with industrial production increasing by 7 percent, total retail revenues and consumer services by 23 percent, foreign arrivals by 11.7 percent, and exports by 34.6 percent. More than 1.2 million jobs have been generated.

The country has step by step brought inflation under control with the consumer price index rising just 0.36 percent in October, the lowest since September 2010.

Cabinet members proposed measures to stabilise the exchange rate between the Vietnam Dong and the US dollar (VND/US$) and the inter-bank interest rates in the coming months. They said it is necessary to limit banks’ bad debts, control the real estate market, and tightly monitor investment projects sourced from the State budget and Government bond sales.

Central bank governor Nguyen Van Binh assured that his bank will guarantee the liquidity of the whole system, control the operation of commercial banks and continue to trim interest rates.

Minister of Agriculture and Rural Development Cao Duc Phat proposed that the government allocate VND447 billion to Mekong delta provinces to reinforce river embankments and irrigation projects for the upcoming rice crops.