>>Government keeps focus on inflation control

After the Government’s regular meeting on July 1, Prime Minister Nguyen Tan Dung answered reporters’ questions about the results of socio-economic management in the first half of 2011 and targets and key tasks for the remainder of the year.

Reporter: The Party and State have paid special attention to controlling inflation and stabilizing the macroeconomy. What is the Government’s evaluation of the situation in the first half of this year and what are the key tasks for the upcoming months?

PM Dung: Inflation control and macroeconomic stabilization was a key task for 2011 and Vietnam has achieved positive results in the first half of this year. The consumer price index (CPI) has steadily slowed down (3.32 percent in April, 2.21 percent in May and 1.09 in June) and the foreign currency and gold markets have been stabilised with foreign exchange rates kept at an acceptable limit. Foreign currency reserves have improved and credit growth is under control. Exports rose by more than 30 percent while the trade deficit fell to 15.72 percent. Successful reduction of State budget spending, cutting public investment and strictly implementing monetary policies have resulted in a drop in the total social investment capital to 38.3 percent of the GDP compared to last year’s figure of 45.6 percent. State budget collection reached more than 55 percent of the estimates, up nearly 23 percent over the same period last year. Budget overspending in the first six months came to 23 percent of this year’s estimates and despite a number of difficulties, the country’s GDP growth still reached 5.57 percent. 

These are encouraging achievements but we must be objective. The second half of this year will see more challenges, such as high inflation and interest rates, as well as a large trade deficit.

Controlling inflation and stabilizing the macroeconomy are still top priorities.

The Government will continue to implement its tightened, cautious and effective monetary policies and improve the quality and focus of growth in production and exports, especially agricultural production and the development of small- and medium-sized enterprises. We will strictly control loans for real estate projects, reduce lending interest rates, keep exchange rates at reasonable levels and manage the foreign currency and gold market more effective.

The Government will combine its tightened fiscal policy with a cautious, more effective monetary policy to keep trade deficit at 15-16 percent. It will check and cut public spending and strictly manage State-owned enterprises’ investments to improve the efficiency of public investment. It will also cut 10 percent of regular spending and spend that money on social welfare.

The nation must also strive to reduce budget overspending to under 5 percent of the GDP, ensure the balance of supply and demand for essential products and services for production and daily life, prevent speculation and unreasonable price hikes, and curb inflation at 15-17 percent.

The Government will also implement measures to remove obstacles for businesses, especially small-and medium-sized enterprises in an effort to boost production and attain 6 percent GDP growth rate for the year. This aims to help ensure social welfare and create a foundation for development in the future.

Reporter: Ensuring social welfare is also a key task. Could you tell us what has been done to achieve this in the first half of the year and what needs to be done in the second half?

PM Dung: Despite a limited budget and efforts to reduce overspending, the Government still pays special attention to ensuring social welfare. It has devised new policies and poured investment into projects to assist poor and low-income people as well as social policy beneficiaries.

In the first half of this year, the Government provided allowances worth more than VND9,000 billion to officials, State employees, members of the armed forces, and low-income and poor people. It raised the per diems for the armed forces, supported the poor when electricity prices were raised, adjusted salaries and social insurance for State employees, the armed forces, pensioners and other social policy beneficiaries and exempted school fees. An additional 600,000 people now receive regular allowances and more than 720,000 new jobs were generated in the first six months.

The Government evacuated all Vietnamese workers in Libya, brought them back home safely and helped them gradually stabilise their lives. It carried out a national target programme on creating new rural areas and provided more than 56,000 tonnes of rice to victims of natural disasters. It issued new poverty standards for 2011-2015 and a resolution for sustainable poverty reduction in the 2011-2015 period.

However, people’s living standard is still difficult, especially poor and low-income workers.

In the second half of this year, we must make further efforts to fulfill the social welfare targets for 2011, including generating 1.6 million jobs, reducing the number of poor households to 2 percent based on the new standards (4 percent in the 62 poorest districts).

The Government will continue to build houses for disadvantaged people and implement it programmes for new rural areas. It will raise the minimum wage for workers in the business sector as of October 1 and extend the corporate income tax payment deadline. It will also submit a decision on corporate and personal income taxes exemption to the National Assembly.

The Government will deal with social issues for workers, provide better healthcare and educational services, mobilise resources to control the impacts of natural disasters and adjust and issue new programmes and policies to fulfill social welfare programmes for the 2011-2015 period.

Reporter: Could you brief us on prominent developments in defence, security and external relations over the past six months?

PM Dung: The Government has closely directed the implementation of tasks in these areas and has achieved significant results. Politics, security, national defence, social order and safety have been strengthened and external relations have been effective.

We strictly implemented suitable measures to ensure social security in Muong Nhe district and ensure our national sovereignty in the East Sea. Many important national events, including the 11^th National Party Congress and the National Assembly and People’s Council elections were carried out successfully.

In the near future, we must pay special attention to implementing our key tasks objectively and follow the Party and State’s policies in a strict and timely manner to ensure social security and national sovereignty.

Reporter: What is the main direction for economic development in the near future?

PM Dung: We must carry out basic solutions over a long-term period to ensure effective sustainable development. We will restructure the economy and shift our growth model from dependency on foreign investment capital, exploitation of natural resources and a low-quality labour force to using advanced technologies and creating a high quality labour force with modern management skills. This is an essential requirement in the process of globalization and in the context of fierce competition. The improved implementation of our targets and tasks for 2011 will be the premise for these important tasks.

The socio-economic situation in the first half of this year demonstrates that the Politburo’s conclusion No.2 and the Government’s Resolution No.11 is the appropriate path to follow. The positive results can be attributed to efforts of the whole nation. The tasks for the remaining months of this year are demanding and require the entire Party, State, and population to make joint efforts to implement and enforce measures to curb inflation, stabilise the macroeconomy and ensure social welfare, thereby creating the premise for sustainable development for the following years.

Reporter: Thank you very much.