Gov’t to prioritise economic recovery, prevent high inflation

The government will introduce more policies to stimulate the economy, support recovery efforts and boost economic restructuring, said Prime Minister Nguyen Tan Dung at the National Assembly question time in Hanoi on November 19.

Going on with stimulus policies

Mr Dung assured NA deputies that Vietnam will fulfil the target of achieving a 5.2 percent GDP growth rate this year thanks to the past 10-month achievements and positive signs of the national and global economies during the last two months of the year.

Though Vietnam’s GDP rate is rather high compared to other countries in the context of the global economic recession, the recovery remains slow going and the 5.2 percent rate is the lowest compared to the past few years, said Mr Dung.

To meet the targets of obtaining the GDP rate of 6.5 percent in 2010 and 7-8 percent in the following years, Mr Dung said the government will continue with appropriate economic stimulus policies with a focus on restructuring the national economy, increasing the quality, efficiency and competitiveness of the economy, stabilising the macro economy, preventing a possible return of high inflation and ensuring social welfare. These policies will be introduced in December 2009.

In addition, the government will issue a decree on credit policy to support agriculture and rural development in line with the Party Central Committee’s resolution.

Tightening expenses

Mr Dung affirmed that after the current NA session, the government will work with provinces and cities to implement a NA resolution on State budget allocations for 2010 as soon as possible. According to the PM, ministries, centrally-run sectors, provinces and cities must tighten their budget management, and prevent tax fraud and evasion, especially taxes on natural resources, real estate, import-export activities and services.

He affirmed that monetary policies will be regulated under the market mechanism through open market instruments. The government will stabilise and gradually lower interest rates to support economic recovery, especially after the economic stimulus package comes to an end.

The government will keep a close watch on total means of payment and maintain the credit balance growth at a reasonable rate to meet the requirements of the national economy. It will tighten the foreign currency market, employ flexible exchange rates, cope with any fluctuations in capital sources, encourage exports, reduce imports and safeguard the overall balance of payment and necessary foreign currency reserves.

Mr Dung noted that the National Assembly has just adopted a resolution, under which total social investment capital in 2010 will make up 41 percent of GDP and budget deficit will be slashed to 6.2 percent of GDP. To meet the target, the government will continue to instruct ministries, sectors and localities to iron out snags in administrative procedures and land clearance, and simplify capital construction procedures, bidding regulations and capital allocations to speed up project implementation.

Mr Dung attributed Vietnam’s high Incremental Capital Output Ratio (ICOR) to low public investment efficiency, big waste as well as cumbersome and costly investment procedures. He affirmed that the government will increase public investment management, accelerate administrative reform and encourage non-State economic sectors to invest in infrastructure construction and production.

Once these solutions are put in place, our ICOR will gradually decrease, said Mr Dung.

Solving social issues

The government leader admitted that it is not easy to solve pressing social problems as this task requires more efforts, resources and time from the government, ministries, sectors, localities and people.

“The government will make every effort to instruct localities to effectively implement poverty reduction projects in a rapid and sustainable manner,” said Mr Dung.

He highlighted the political and social significance of the poverty reduction programme in 62 poor districts across the country, which began recently and is scheduled to last for 12 years. The programme aims to benefit 2.5 million people, of whom more than 90 percent are from ethnic minority groups. It will help the proposed districts develop production, create jobs, increase local people’s incomes, train staff and build basic infrastructure facilities.

Apart from these 62 districts, provinces and cities will mobilise all resources available to assist other poor districts in their localities, especially those which are inhabited by ethnic people, to lower the poverty rate. The government will also amend and issue new policies on sustainable poverty reduction.

In the following years, Mr Dung affirmed that the government will focus on boosting vocational training, creating jobs and increasing labourers’ incomes. To this end, it will develop the vocational training system, increase its quality and offer incentives to attract foreign investment in vocational training.

The government will effectively implement a vocational training project for rural people closely linked to the labour market to serve economic restructuring and agricultural production in particular, said Mr Dung.  

The PM also said that in 2010, the government will review the 2001-2010 national education development strategy and draw up a new one for the next 10 years, with a focus on increasing educational quality to meet national requirements for high quality human resources.