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Gov’t: Inflation under check
The Government at a regular monthly meeting ending on Wednesday ascertained that inflation this year would be under control while credit growth would be lower than the permitted rate of 25%.
As Cabinet members cannoned their focus on the inflation threat during the two-day meeting, Prime Minister Nguyen Tan Dung gave concluding remarks that there was no abnormal signals in the consumer price index in the first two months, said Le Duc Thuy, chair of the National Financial Supervision Commission.
“There is no sudden rise in the CPI in the first two months”.
Thuy told a press meeting after the Cabinet meeting in Hanoi that PM Dung had approved his committee’s analysis on inflation to deliver the conclusion.
It is the psychological factor that prevails over the real inflation, he told reporters.
The consumer price index (CPI) in the first two months of the year often accounts for 40% to 50% of the overall weighted consumer price index of the whole year, as seen in recent years, said the former central banker Thuy, who was told by the Prime Minister to address the press conference. Thuy pointed out that “this was the viewpoint of the National Financial Supervision Commission, which was later adopted by the Prime Minister at the Cabinet meeting.”
“There is no sudden rise in the CPI in the first two months,” he referred to the CPI of 3.35% in the first two months and gave comparisons with figures from previous years.
In the years between 2003 and 2007, the CPI for the first two months were 3.1%, 4.1%, 3.6%, 3.3%, and 3.2%, but the final inflation figures in such years were still under control, Thuy said.
However, he admitted that in such years, the March CPI was often low, but the situation this year would differ due to the recent hike in inputs like petrol and power as well as the recent depreciation of Vietnam dong against the U.S. dollar.
“Our National Financial Supervision Commission forecasts March CPI at 0.5% to 1%, while the Finance Ministry puts it at 0.5% to 0.75%, and the Ministry of Planning and Investment projects it at 1%. Therefore, we should not worry since the CPI is still controllable and prices these days are falling,” he reassured the media.
Regarding credit expansion this year, Thuy said the expansion would be far lower than the targeted 25% due to tightening policies being applied since the end of 2009.
The monetary tightening policy has resulted in a fall in mobilized funds in the first two months of the year, according to Thuy.
“I forecast credit growth this year to be 20% at most, or even lower at between 10% and 12%,” he said. Even though, gross domestic product will still rise by some 6.5% this year, he added.
During the Cabinet meeting, PM Dung also approved plans to keep the foreign exchange market stable between now and the end of the year. He also ordered the Ministry of Industry and Trade to make it clear to the public that there would be no more power price hikes in 2010, and rejected a plan to raise coal prices.
VietNamNet, SGT
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