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Vietnam to slow inflation to 6 percent this year, PM says
Vietnam plans to slow inflation to between 6 percent and 7 percent this year by monitoring money supply and exchange rates, Prime Minister Nguyen Tan Dung said in a statement on the government’s website Tuesday.
The Ministry of Finance, the Ministry of Planning and Investment, and the State Bank of Vietnam will “closely monitor the national balance of payments, and developments in the local money market and interest rate, exchange rates, to ensure reasonable credit growth and overall liquidity in the economy,” Dung said.
“The government’s economic stimulus package has spurred capital demand from companies, and so significantly increased lending from banks,” Phan Thi Chinh, deputy general director of Bank for Investment & Development of Vietnam, the nation’s second-biggest lender.
Vietnam should phase out loan subsidies as “rapid” credit growth threatens to stoke inflation, the World Bank said in a report Monday. Inflation eased to 5.6 percent last month, from 17.5 percent in January and 28.3 percent in August, the quickest since at least 1992.
Total outstanding banking loans increased 15 percent through mid-May from December, Deputy Prime Minister Nguyen Sinh Hung told parliament last month. The National Assembly should stop economic growth from slowing and ward off a revival in inflation, Hung said.
The prime minister also asked the finance ministry to “closely watch the movement of the stock market and development of foreign portfolio investment,” according to Tuesday’s statement.
The government last month proposed to parliament that the gross domestic product (GDP) target for this year be lowered to about 5 percent, although many economists say even that will be a difficult mark to hit as the global economic recession pushed the country’s first quarter GDP growth to its lowest level in years.
Last year, GDP growth was 6.2 percent and in 2007 it was 8.5 percent.
Last week the government also set an economic growth target of between 7 and 8 percent a year in the 2011-2015 period, lowering by half a percentage point the floor of the range as compared with its target for the previous five years.
Vietnam’s economy grew at an average annual rate of 7.5 percent between 1996 and 2005, according to the Ministry of Planning and Investment.
The government target for GDP growth in the five years from 2006 to 2010 was 7.5 percent to 8 percent.
thanhnien, Bloomberg
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