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MPI Minister: Difficulties still ahead
Minister of Planning and Investment Vo Hong Phuc believes that the personnel changes in the government’s apparatus will not greatly affect the macroeconomic management. However, he said the national economy is still facing big difficulties in the second half of the year, especially the high inflation, trade deficit and interest rates.
The economic indexes in the first six months of the year are all far different from the targets set by the National Assembly, and the government has many times adjusted its forecast figures. What would you say about that?
We submitted the economic plan for 2011 to the National Assembly last year, after analyzing the economic performance in the first nine months of 2010, when the national economy was stable and indexes were all good. Therefore, the National Assembly set up the growth rate at 7-7.5 percent and the inflation rate at 7 percent.
However, right after the National Assembly’s working session; uncertainties broke out in the world. The happenings in Africa and Middle East influenced the crude oil price, while the public debt in Europe has been badly affecting the global economy.
What are the difficulties Vietnam’s national economy will have to face in the last six months of the year?
There are three biggest problems. The biggest one is the sharp consumer price index (CPI) increase. The index has increased by 13.29 percent over the end of 2010. Last month, the government adjusted the CPI increase target, and decided that the CPI should increase by 15 percent at maximum in 2011.
However, the Ministry of Planning and Investment believes that it is very difficult to fulfill the task. Our experts think that 17-18 percent is the most feasible inflation rate scenario for 2011.
Bank interest rate also remains a big problem. The State Bank still sets a cap of 14 percent on deposit interest rates. However, in fact, commercial banks pay 18-19 percent for deposits, while the lending interest rates have climbed to 22-24 percent.
The third big problem is the trade deficit. The National Assembly decided that the trade deficit must not be higher than 18 percent of export turnover. The Government wanted 16 percent. However, in fact, the trade deficit in the first half of 2011 had exceeded 18 percent. The high trade deficit will threaten the payment balance and foreign currency reserves.
After five months of the year, the CPI increase target has been raised to 15 percent, while you have said the figure would be 17-18 percent in reality. What is the basis for the prediction?
The 15 percent target was set based on optimistic forecast, after the prices of the latest two months have cooled down. However, things are getting different. Our experts believe that the prices would keep rising until September, then cool down for a short time and then would rise again in the last months of the year.
Even the 17-18 percent would be a difficult task. However, it is still good in the current circumstances of Vietnam. In 2008, Vietnam’s GDP growth rate was 6.5 percent, while the inflation rate was 22 percent.
How do you think will the uncertainties in the East Sea affect Vietnam’s national economy, especially in the oil and gas exploitation?
The East Sea issue is always complicated and Vietnam needs to anticipate everything. There have been no big impacts on the national economy. The oil exploration and exploitation has still been carried out normally, while the output remains stable. In the long term, this will depend on the negotiations and the problem settlement of involved parties.
There will be personnel changes by the end of the year, when the National Assembly establishes a new cabinet. How will it affect the economic management?
If we can do the organization work well, there will not be big changes. In 2007, when the Prime Minister Nguyen Tan Dung took the office from former Prime Minister, Phan Van Khai, everything went smoothly, and the economy witnessed high growth rate in that year.
vietnamnet, VnExpress
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