In the first quarter of this year, market prices increased dramatically with the average consumer price index (CPI) rising 9.2 percent compared to December 2007. The figure is far above the 8.5 percent target set by the Government. Price rises have had a direct impact on various aspects of everyday life. The Government, ministries, agencies and administrations at all levels have intensified a number of measures to control inflation and stabilise the macro-economy. Many economists also gave their evaluations and provided solutions to help the Government deal with the matter.

One of the key tasks is to have concrete and practical measures to improve people’s living conditions and cope with market fluctuations. However, it is essential to find a suitable solution and draw up a plan to combat inflation.

According to Le Xuan Nghia, head of the banking strategy department under the State Bank of Vietnam (SBV), the inflation rate will be higher than in previous years. At present, it is not necessary to set specific targets to control inflation. “We should be patient and set medium-term targets so that we can gradually lower the inflation rate,” said Mr Nghia.

On the other hand, tightening monetary policies may have a negative impact on businesses. In fact, the banks have already reduced their annual interest rate from 12 percent to 11 percent. This means that the SBV is gradually lowering interest rates, he added.

Meanwhile, the Government proposed eight specific measures to combat inflation, stabilise the macro-economy, maintain a sustainable growth and ensure social welfare. Dr Nguyen Quang A, former chairman of the administration board of the non-State VP Bank, said that the first measure issued by the Government is to tighten the monetary policy and reduce the level of credit and loans, especially for stock market and consumption purposes.

The eight measures devised by the Government are appropriate, however, it will take time to reduce the inflation rate, depending on each measure and the ways they are implemented. The results will be seen in the future.

Vietnam should analyse the costs and profit of public invested projects more carefully and should sort out projects, which should be delayed or cancelled if conditions become worse. Public investment should be more transparent and effective, suggested by Jonathan Pincus, senior economic expert of the United Nations Development Programme in Vietnam.

Mr Pincus said that the first challenge for Vietnam is to boost exports while the US market’s demands have reduced and the US dollar is weaker than other foreign currencies, including the Vietnamese dong. Anther sensitive issue suggested by Mr Pincus is that Vietnam should consider imposing tax on exported rice. He said that the UNDP highly valued the Vietnamese Government’s efforts. Vietnam will soon overcome its current difficulties as all the obstacles are not discouraging investors who believe that Vietnam has a bright future and a friendly investment environment.

Answering reporters’ questions on the sidelines of a conference to discuss measures to curb inflation and implement socio-economic development plans for 2008 in the southern provinces held in Ho Chi Minh City on April 7, Prime Minister Nguyen Tan Dung emphasized that the current difficulties are temporary. Vietnam has many advantages and a great potential for development, such as stable politics and an improvement in the investment environment. If ministries, departments, localities and the people join together to curb inflation and stabilise macro-economic, targets for sustainable development, then social security will be ensured./.