Weathering the inflation storm

2008 was a year of difficulties for the government in terms of maintaining the national economy in the context of global inflation and price hikes. Mid-way through the year, many international financial institutions, who are the world’s leading economic experts could not make an exact prediction about the future of the world’s economy or the level of increase in oil prices.

In addition, natural calamities in 2008 left 550 people dead or missing, causing the State and people nearly VND12,000 billion worth of damage.

The government closely monitored the domestic and international situation to adjust policies and devise solutions to cope with the situation in a timely manner. Prime Minister Nguyen Tan Dung has constantly asked the bank governor, Ministers of Finance, Industry and Trade, Agriculture and Rural Development to make frequent reports on the development of the situation via telephone.

The governmental Standing Committee convened a meeting for representatives from relevant ministries and agencies, as well as economic experts from early in the morning till midnight. The meeting aims to discuss and devise solutions to manage the marco-economy and provide support to industries and people.

Under the leadership of the political bureau, along with consultancy from local experts and international organizations, the government agreed to direct and implement eight groups of urgent solutions for controlling inflation, stabilize the macro-economy, maintaining reasonable economic growth and ensuring social welfare. These solutions reflecting the State and Party’s policies and guidelines in providing good care for people, have been highlighted by the international community.

The solutions also affirmed the government was well on track to manage the economy in 2008. The government curbed inflation successfully and achieved an economic growth rate of 6.23 percent, third-highest after China and India in the region.

The agricultural sector surpassed the targets set for the socio-economic development plan until 2010. In addition, the government also took effective measures to ensure social welfare from the central to grassroots level.

Along with issuing ten new policies, the State spent VND42.3 billion ensuring the 15 percent increase in pensions, especially for those that have devoted themselves to revolutionary activities, people living in the flood affected areas as well as implementing an exemption for dutiful contributions.

With the determination of not leaving anyone hungry, the government granted around 50,000 tonnes of rice to those living in the flood and epidemic-affected areas.

From curbing inflation to preventing economic downturn

In the remaining months of the year, in the context of impacts from the financial crisis in the world’s economy, the government made great efforts and devised solutions to prevent economic downturn and continues to overcome difficulties in 2009. Vietnam has advantages in terms of rich natural resources and political stability, which is highlighted by international friends.

In addition, over the past years, we have swiftly improved the performance of the market economy, and achieved a spectacular economic growth. In spite of many difficulties, foreign investors consider Vietnam an attractive, safe and profitable destination.

Moreover, with population of nearly 87 million of people and an average income per capita already reaching US$1,000 each year, Vietnam will likely be a huge consumption market in the future.

In addition, prices of materials, machines and technology are dropping in the current context of the global economic turndown, while the country’s inner financial strength has great potential for further development. This is a good chance for Vietnam to disburse investment to meet its increasing demand for developing infrastructure, renewing technology, increasing productivity and improving the quality of the national economy.

Furthermore, the country has drawn many valuable lessons through its experience in curbing inflation, thus helping to consolidate trust and unity in overcoming the challenges ahead.

The Government attached great importance to preventing the economic slowdown, maintaining economic growth and ensuring social welfare. To implement these tasks, it is necessary to provide assistance to businesses to help them overcome obstacles and promote export activities. Cabinet members worked hard to identify five urgent solutions to prevent economic slowdown.

In the beginning of this year, ministries and agencies made amendments and supplements to complete mechanisms and policies, thereby simplifying administrative procedures and creating the best conditions for business operations. The Government reduced and exempted taxes worth VND1,500 billion for businesses and set up a credit support fund for small-and-medium-sized enterprises (SMEs). Households also had easy access to bank loans to develop production and generate jobs.

The Government also issued more bonds to mobilise capital sources and allocated about VND17,000 billion for the national foreign currency reserve fund to help banks reduce their interest rate for SMEs, which hold 96 percent of the country’s total investment capital and employ 96 percent of workers.

The Government asked provinces and cities to disburse investment in an effective manner, particularly the VND200,000 fund for infrastructure development in 2009. The Prime Minister allowed localities to make a list of projects and select bidders, with the aim of pushing up the investment disbursement progress. The banking system also gave assistance to businesses by reducing the basic interest rate, restructuring bad debts and providing them with quick access to bank loans.

Meanwhile, the Government has pledged to ensure an adequate supply of investment for implementing social welfare policy, especially for the poor, low-income people and unemployed workers. Notably, the country will offer unemployment insurance and build 500,000 houses for the poor in the beginning months of 2009. It will also spend VND3,000 billion from State budget to carry out a programme to help 61 poorest districts escape from poverty. The Vietnamese government plans to grant VND3,500 billion to help 3.5 million poor households welcome the upcoming lunar New Year Festival (Tet), which falls on Jan. 26.

Vietnam has great potential for development thanks to its political and social stability, as well as the people’s complete trust in the Party and Government’s orientations and policies. This creates a firm foundation for the country to fulfill its set targets in 2009 successfully.