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Government proposes socio-economic target adjustment
In the face of the global economic crisis, the Government has suggested that the National Assembly makes several adjustments to 2009’s socio-economic targets, including reducing this year’s GDP growth rate to 5 percent instead of 6.5 percent approved at the previous session.
Delivering a statement at the 12th National Assembly’s fifth session in Hanoi on May 20, Minister of Planning and Investment Vo Hong Phuc said that in the context of the deepening global economic recession and many unpredicted developments, the adjustments will tighten up management work and ensure a balanced macro-economy.
The growth in the turnover of exports should be reduced from 13 percent to 3 percent while the consumer price index will be adjusted to under 10 percent compared with the target of keeping it under 15 percent set previously this year to avoid inflation and ensure the success of the newly introduced economic stimuli.
The NA’s Committee of Finance and Budget (CFB) also agreed with the government’s statement, saying that the adjustments are necessary in the current economic climate.
However, CFB Chairman Phung Quoc Hien quoted many deputies as saying that with a first quarter GDP growth rate of 3.1 percent - the lowest level for many years, the 5 percent target for the whole year will be hard to reach if the government does not introduce any more positive measures and the world economy falls into a deeper crisis.
The committee also suggested the government work out solutions towards a financial and monetary strategy ensuring macroeconomic stability and maintaining an inflation rate lower than GDP growth in the long term.
The government proposed a maximum budget overspending of 8 percent of GDP. However, the CFB asked the National Assembly to cap the rate at 7 percent of GDP.
The government’s suggestions on socio-economic adjustments are considered appropriate to domestic and international forecasts. The International Monetary Fund (IMF), in its April report, predicted that the global economic growth will stand at minus 1.3 percent this year and Vietnam will be one of few countries enjoying positive but not high GDP growths.
In fact, most of the country’s industries are slowing down, exports continue to be affected and tension increases in the foreign exchange balance. Especially, budget collection will sharply decrease compared with the NA estimates due to lower than expected crude oil price, sluggish economic growth and declining incomes from taxes.
The Central Institute for Economic Management has recently put forth three scenarios for 2009, with the highest estimate of GDP growth at 5 percent and the lowest of 3.3 percent.
The government’s socio-economic adjustments will be discussed by the NA in the middle of next week and are expected to be adopted at the closing session of the NA meeting.
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