Curbing Inflation: From Passiveness to Activeness

 

Minister Vu Duc Dam reveals that the constant falling of CPI has shown that the government has taken active measures in controlling inflation instead of passiveness as before. We have seen important progress in macro-economic developments, reflected in the relative stability of the socio-economic indicators in the first 4 months.

According to the report of Ministry of Planning and Investment, the CPI in April increases by 0.05 percent over the previous month and 2.6 percent over the end of 2011 which has been regarded as the lowest during the past years. Delightedly, credit interest rates continue to decline, the liquidity of the banking system and foreign exchange reserves improve, exchange rate maintains stable, stock market shows signs of prosperity.

 

Industrial production recovered strongly. The index of industrial production (IIP) grew by 7.5 percent in April, in which the processing industry rose by 9.3 percent. Agriculture, forestry and fishery production stayed stable. Aquatic production rose by 4.1 percent in 04 months. The service sector continues to grow fairly. Total retail sales of goods and services during the 4 months were estimated to increase by 21.6 percent over the same period last year.

 

Relevant ministries, agencies and local authorities have done their utmost to overcome difficulties to accelerate the disbursement of funds ... As of 15 April, disbursement of development investment from the state budget was estimated to reach 26 percent against the annual plan. ODA disbursement for first 4 months increased by 1.4 percent over the same period. Particularly, in April 2012, disbursement increased by 41 percent over the first 3 months.

 

During the first four months, job opportunities have been generated to as many as 481 thousand people. Over the same period in 2011, the number of poor households and poor persons decreased by 16.7 and 20.2 percent respectively.

 

Delivering the instruction of Prime Minister Nguyen Tan Dung at the regular meeting of the Government, Minister Vu Duc Dam said the government will take the initiative in curbing inflation, stabilizing macroeconomic to help avoid the bank collapse or skyrocketing inflation which has occurred during the past few years.

 

Minister Vu Duc Dam stated that the macro-economic situation is still facing with many difficulties and challenges. Interest rates have declined but still high. Businesses still meet difficulties in loan access. Outstanding credit is on the decline. In addition, the production and business activities are at standstill with a large amount of inventory. Quite a few enterprises have to cease their operation. The progress of state budget revenue is lower than that of the previous years. The trade deficit will exert negative effects on investment, production and business activities in the future.

 

In time to come, the Government will focus on curbing inflation and stabilizing macro-economy. State Bank continues to implement the roadmap to lower interest rates with appropriate and timely solutions on debt classification, debt restructuring to help credit institutions and enterprises to balance its finance status. Due attention will be paid to the restructuring of the commercial banking system, implementing measures to handle bad debt, and creating conditions for the production and business enterprises to have easier access to loan capital.

 

Regarding fiscal policy, the Government will ensure the proper budget balance, keeping the state budget deficit in 2012 at 4.8 percent of GDP, accelerate the disbursement of public investment, encourage social investment and promote FDI thereby contributing to economic restructuring. State's credit capital will be invested in infrastructure development, especially infrastructure for electricity, transportation...

 

Business activities, especially areas with advantages in markets such as agriculture with due attention on domestic and foreign market expansion will be prioritized for development. The Ministries need to control market prices, especially for essential commodities.

 

On the transport fee collection plan, Minister Vu Duc Dam says that the time to apply the collection of road maintenance fee from June 1 is very urgent. Therefore, the ministries should continue to perfect the fee collection plan. To date, the draft plan has been submitted to the prime minister who has requested the finalization of the plan to serve as the basis for reviewing its feasibility. If the Prime Minister passes the project, it will be submitted to the Government for comments. And if the government shares the same opinion, the plan will be submitted to the National Assembly Standing Committee.

 

Government has assigned the Ministry of Transport, Ministry of Finance to continue to finalize the preparation plan including technical solutions to complete the fee collection project and propaganda plan. The factors that should be taken into consideration include the impact on the lives of the people, the technical conditions for the collection of charges.