PM Spells Out Solutions to Inflation and Sustainable Growth

Prime Minister Nguyen Tan Dung signed a resolution on measures designed to curb inflation, stabilize the macro-economy and ensure social security and sustainable growth on April 17. 

Food price has become stable after government takes measures to control inflation

To achieve the above tasks and targets, the government agreed to carry out the following eight solutions simultaneously.

The first solution is the implementation of a tighter monetary policy. The money supply in circulation and credit debt have continuously increased since 2004 and have increased significantly in 2007, which is a major contributor to inflation.
 
Accordingly, the government will closely inspect and supervise commercial banks’ activities to ensure that they strictly observe the regulations on capital mobilization, lending and credit quality.

Second, closely monitor and raise the efficiency of public spending. Investment from the state budget and from state-owned enterprises now accounts for about 45 percent of the total investment, cuts to this investment source will reduce demand pressure, lowering the trade gap and improving the effectiveness of the economy.
 
The government will follow the policies of restraint in regular spending, increasing the efficiency of budget investment and strictly managing investments by state-owned businesses.

Third, focus on developing industrial and agricultural production and services to ensure balance in goods supply and demand. Production development is a basic solution to the increasing supply for the domestic market and that for export, contributing by curbing inflation, reducing the trade imbalance and promoting economic growth.

To promote production development, the Government ordered ministries, provinces and cities to take measures to overcome the consequences of bad weather and epidemics to raise the output of food and foodstuff.
 
In addition the government will remove difficulties in capital, market and administrative procedures.

Fourth, the promotion of export and the control on imported products to reduce the trade deficit. Balancing supply and demand, especially of essential goods for production and daily life, is necessary to prevent sudden price hikes and speculation.

The Ministry of Finance was asked to raise import tax and luxury duties for unessential goods like complete autos and alcohol, in compliance with the country’s integration commitments.

To ensure food security, the Trade Ministry was assigned to cooperate with the Agriculture and Rural Development Ministry to control rice export volume at 3.5-4 million tons this year.

Fifth, practice thrift in production and consumption. The government and state agencies were called on to cut administration expenses by 10 percent. Enterprises must re-check expenses to reduce prices and are encouraged to save fuel and energy in their daily lives.

Sixth, tighten market management to fight speculation, smuggling and trade fraud, and ensure compliance with the law on price, especially of important materials and goods such as petroleum, cement, steel, medicine and foodstuff.
 
Seventh, the government will take more measures to stabilize people’s living conditions and production, and expand the scope of social welfare policies.
 
To stabilize production, the government will not increase prices of petroleum and electricity before July this year and will stabilize prices of cement, fertilizer, transport fares, and school and hospital fees.

Lastly, the resolution said information dissemination will be promoted to gain public consensus and create a driving force for the implementation of the set targets and measures.

By Q. Phuong – Translated by Yen Chuong

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