Vietnam Tries to Keep Inflation below 4 per cent

Vietnam will have to try its best to keep the inflation below 4 per cent in the last six months of this year to meet the parliamentary goal of maintaining the inflation of less than 8 per cent in the whole year because the CPI index already increased 4 per cent.

According to Mr. Tran Van Ta, Deputy Minister of Finance, this is a hard task because of the soaring price of “inputs” of the economy in recent months. The escalating price of materials, specially oil and oil-based products, are pressurising prices of other commodities. The price of farm produces has also rocketed due to changeable weather. The likely price rise of US dollar in 2006 can lead to import prices of commodities and production inputs. 

 

In addition, the continuation of the salary and income rise roadmap will pull up spending demand of different walks of life. The certain price hike in several key commodities like cement, electricity and coal will also lead to the rise in money supply and prices of other goods.

 

Ta said, to stabilise the market, the Ministry of Finance, other ministries, branches and enterprises must apply synchronous measures to avoid the imbalance in the supply of and demand for goods. Particularly, the industry cannot suffer blackout and the agriculture cannot lack urea fertilisers. The steel sector needs to boost up steel billet production to reduce reliance on import. Vietnam also needs to import sufficient petroleum products for the national demand of about 13 million tonnes, enough clinker for cement production and adequate sugar as well as regulate the export of its rice (some five million tonnes).

 

Monetarily, the banking and financial sectors need to control the money supply volume in the economy in order to regulate the growth of payment means and credit to obtain the inflation control target. (The total payment means increase 18-20 per cent and the credit outstanding was 19-21 per cent).

As regards price management, Vietnam will continue subsidising several commodities and services. Accordingly, subsidies will be gradually cut on electricity-consumed products and the power price will be uplifted from 2006 to 2008 in order to attract other economic investors to invest in power development. The coal price will also be suitably regulated for four major industries of electricity, fertiliser, paper and cement.