Deputy Prime Minister Nguyen Sinh Hung said at the one-day Mid-year Consultative Group (CG) meeting for Vietnam, held in the central province of Ha Tinh, that the country would work out solutions given in the Resolution to stabilize the economy.

The senior leader added that the long-term target of the country is curbing inflation at a rate which is lower than the economic growth, and forecasted the country’s GDP growth would recover and reach 7% in 2014.

“The Government will make efforts to stabilize the exchange rate to support production in the country and increase national foreign reserves. The balance of payment will be healthy by 2020,” Hung said. He affirmed in the meeting that ensuring a social safety net was a long term goal of the Government.

Concerning downsizing public investment, Vietnam has cut VND40,000 billion from the planned budget, he said.

At the mid-term meeting, while recognizing the initial progress of implementation of the Resolution, development partners encouraged the Government to pay more attention to the ‘structural origins’ of instability, including the fiscal policy and transparency.

“While there has been some initial success, confidence in the overall success of the strategy remains fragile,” said Benedict Bingham, IMF’s Senior Resident Representative.

“In order to bolster confidence, the government will need to send a strong signal that Resolution 11 will be sustained beyond 2011 and set concrete targets for the restoration and maintenance of macroeconomic stability over the medium term.”

In addition, international donors and the Government discussed at length the implementation of Resolution 11 and its impacts so far, as well as how to ensure its lasting effect on the economy.

Cautioning against the premature withdrawal of Resolution 11, Alastair Cox, Australian Ambassador to Vietnam, on behalf of the development partners’ community, said solutions in the solutions should be executed well into the year 2012.

“Development partners welcome Resolution 11 and the Government’s strong commitment to its full implementation to restore and sustain market confidence. This may, however, take time, well into 2012. We remain concerned that Vietnam will continue to suffer recurrent bouts of macro-economic instability unless significant reforms are implemented,” he said.

In addition, international donors emphasized that periods of macro-economic instability and high inflation had tended to highlight shortcomings in the social protection response in Vietnam.

“Greater flexibility is required to ensure that new and emerging forms of vulnerability can be addressed and emerging groups of poor and/or vulnerable people - such as urban poor, people living with HIV, people with disabilities, migrant workers and informal sector workers are able to access social assistance and support. Social protection services, including childcare support, are also important so that women can access formal employment opportunities,” said Bruce Campbell, United Nations Resident Coordinator.

Relating to the current high inflation in Vietnam, World Bank economists suggested that Vietnam maintain its tightening fiscal and monetary policies including high interest rates and tightening credit until inflation eases to 10%.

According to data provided by IMF, Vietnam’s CPI increased 17.5% year-on-year, among the highest inflations in the world, and is seriously impacting on the poor people in the country.

This year’s Mid-year Consultative Group (CG) meeting for Vietnam focused on macroeconomic stability, anti-corruption, and social security with impacts of the macroeconomic instability on the poor and vulnerable people, as well as small and medium enterprises.

Source: SaigonTimes