In implementing resolutions of the National Assembly, the supreme legislative body, the Government issued Resolution No.02/NQ-CP dated January 9, 2011 on key solutions for directing and managing the implementation of socioeconomic development plan and State budget estimation in 2011.
However, the world economic situation is developing complicatedly; inflation is accelerating, prices of crude oil, input materials, foods and foodstuffs on global markets continued to go up. In the country, devastating natural disasters are impacting production activities of enterprises and people’s livelihoods.
Important inputs for electricity and petroleum production have climbed, while Vietnam has to loosen monetary and fiscal policies to ward off economic slowdown and sustain economic growth. These woes have pushed up prices and heightened the risk to macroeconomic stability. Thus, to focus on curbing inflation, stabilise the economy and ensure social security are top goals and central tasks for Vietnam at present.
To realize the goals of inflation taming, macroeconomic stabilization and social security guarantee, the Government issued Resolution No. 11/ NQ-CP dated February 24, 2011 requiring ministers, heads of ministry-level agencies, chairpersons of people's committees of centrally governed provinces and cities, and leaders of State-owned enterprises to take the following solutions: Implement tight and cautious monetary policies; implement tight financial policies, cut public investment and reduce budget deficits; Promote production and business, encourage exports, restrict trade deficit, and ensure energy efficiency; and adjust electricity, petrol and oil prices; and support the poor.
Accordingly, the State Bank of Vietnam will coordinate with concerned ministries, institutions and localities to implement tight and prudent monetary policies; harmoniously combine monetary and fiscal policies to curb inflation; control credit growth at below 20 percent and the growth of total means of payment at 15 - 16 percent; prioritise credits for production and business activities, agriculture, rural area, export, supporting industries, small and medium-sized enterprises; and reduce credits for non-manufacturing fields, particularly real estate and securities fields.
The central bank will flexibly operate exchange rates and foreign exchange markets on the basis of market signals; strengthen foreign exchange management, take necessary measures to persuade organizations and individuals, particularly State-owned enterprises, to sell foreign currencies to banks when they have forex income and they will, in turn, purchase foreign currencies with reasonable requests, ensure foreign currency liquidity, stabilise the foreign exchange rate and increase foreign currency reserves.
The State Bank will strictly control gold business activities. In the second quarter of 2011, a decree on managing gold business activities will be submitted to the Government for approval. Accordingly, bullion trading on free markets will be banned, thus putting an end to cross-border gold smuggling.
To implement tight financial policies, cut down public investment and reduce deficit budgets, the Ministry of Finance will coordinate with concerned ministries, institutions and localities to increase State budget revenue by 7 - 8 percent compared with the estimate for 2011, approved by the National Assembly. The ministry will intensely inspect and supervise tax collection management to prevent tax losses; centrally process overdue taxes; and adopt coercive measures to collect overdue taxes and minimise new unpaid taxes.
Ministries, institutions and localities must take the initiative in reviewing spending so as to save an additional 10 percent of normal expenditures in the remaining nine months of 2011 (excluding payroll); reduce budget deficit to less than 5 percent of the country’s GDP in 2011; closely monitor foreign borrowing and repayment, particularly short-term items, of enterprises; and review government debts and national debts. The outstanding balance of government debts, public debts and foreign debts must be at a level that can ensure national financial safety.
In addition, the Ministry of Planning and Investment will coordinate with concerned ministries, agencies and localities to restrict advance funds sourced from the State budget and government bonds allocated for 2012, except for urgent natural disaster response projects.
The ministry will set up inspection teams to review projects using State budget capital and government bond proceeds allocated for 2011, determine suspended, delayed or postponed projects in 2011; withdraw or transfer unnecessary or misused funds allocated for 2011 and report to the Prime Minister in March 2011.
Ministries, institutions and localities should not commence construction of new projects using State budget and government bond proceeds in 2011, except for urgent natural disaster response projects and ODA-funded projects; review, decrease and rearrange funds sourced from State Budget and government bonds to accelerate the progress of urgent important projects needed to be completed in 2011.
To promote production and business, encourage exports, restrict trade deficit, and ensure energy efficiency, the Prime Minister assigned the Ministry of Industry and Trade to coordinate with concerned ministries, institutions and localities in the second quarter of 2011 to promulgate and enforce a regulation on balancing supply of and demand for some kinds of essential goods, provide guidelines for effective rice export, stabilize domestic food prices, cooperate with the Ministry of Finance in managing national reserves to ensure food security, and take timely anti-speculation measures.
Trade deficit must be kept at not more than 16 percent of total exports; lay down suitable principles and procedures to control the import of goods, materials and equipment for projects using State budget and government bond capital, restrict the import of consumer goods. The ministry will also instruct Electricity of Vietnam Group (EVN) and its member companies to make plans for power plants to operate at full capacity in order to meet electricity demand during the dry season and give priority to ensuring sufficient power supply for production.
In addition, the Ministry of Finance will coordinate with relevant ministries, agencies and localities to apply necessary measures and reasonable tax and fee policies to profits of exporters and traders of steel, cement and other commodities which use cheaper inputs than market prices, consider exempting, reducing, breaking and delaying taxes on imported inputs for export-oriented industries like textile, footwear, seafood, cashew nut, wood and pharmaceuticals. It will continue refunding value-added tax to exported goods in 2011.
Specially, the Prime Minister required adjusting electricity, petrol and oil prices in accordance with the market mechanism. The State will apply a support policy to poor families after adjusting electricity prices.
To boost efforts to ensure social security, the Ministry of Labour, Invalids and Social Affairs will coordinate with concerned ministries, institutions and localities to implement social security policies through programs, projects and plans that have been approved; and estimate the expenditure for implementing social security policies according to new poverty standards in accordance with Resolution No. 02/NQ-CP of the Government. It will focus on guiding support for poverty reduction in poor communes and villages, assisting the poor and lending to students.
Q.C
Vietnamese
