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Expert calls for transparency to fight inflation
An academic has criticized the State Bank of Vietnam for failing to clarify financial policies, leading to double-digit inflation rates.
Dr. Tran Ngoc Tho, a professor at HCMC University of Economics, told Tuoi Tre that the Bank should have clarified whether it wanted to bring down the exchange rate or to fight inflation when it raised the dong’s benchmark interest rate and pledged to pump more dollars into the market.
The economy may have misinterpreted the central bank’s messages, he said, which are always of core significance to any market in the world.
He rejected conjectures that the current domestic price hike stems from global volatility.
The current year-to-date two-digit inflation rate cannot be blamed on external elements as signs of world instability are obvious from the beginning.
He cited rising global prices of gold, agro-produce, and oil, adding that Vietnam could have easily forecast the price hike when the US unveiled a $600-billion stimulus package early last month.
Vietnam should have prepared, he lamented. The Southeast Asian country showed a very slow response to global changes unlike its careful neighbors including China, Thailand, and Indonesia.
He further complained that the country’s recent adjustment of interest rates was ill-timed, serving only to put more pressures on the inflation rate.
To avoid falling into the same trap and achieve next year’s inflation target of 7 percent as set by the lawmaking National Assembly, information on public expenditures must be transparent, he asserted.
“Or else high inflation rates will be inevitable.”
He also recommended the State Bank of Vietnam to have a more flexible fiscal policy: increasing interest rates to limit cash circulation but at the same time sensibly providing cash via banks when necessary to balance between supply and demand.
“In this regard, Vietnam has done a bad job so far.”
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