Representatives of Vietnam’s development partners have expressed confidence that Vietnam’s economy will develop strongly and sustainably once Vietnam accomplishes its economic reform. Delegates to the Consultative Group meeting of  donors  for Vietnam held that country’s success in weathering difficulties given the European debt crisis has proved the soundness of the government’s strategy.

International delegates acknowledged the Vietnamese government’s success in managing its macro economy and controlling inflation, although 2011 was a difficult year. Vietnam has maintained a tight and cautious monetary policy and a flexible management of its macro economy, prioritizing credit for agricultural production, export, subsidiary industries, and small and medium-size enterprises. As a result, Vietnam’s foreign exchange market, foreign currency reserves, and international balance of payments have improved. The overall balance of payments has a surplus of 3.1 billion USD, overspending the state budget is estimated to fall to 4.9% of GDP, lower than the set target of 5.3%. Public investment declines to 31.2% of GDP this year while inflation growth is kept to less than 1%. The country’s poverty rate falls by 2%. Director of the Asian Development Bank in Vietnam, Tomoyuki Kimura said that ABD, other governments and financial institutions remain committed to supporting Vietnam’s socio-economic development, particularly the restructuring of its public investment, state-owned enterprises, and banking system.

World Bank (WB) Country Director in Vietnam Victoria Kwakwa, co-chair of the CG meeting, said that 2011 was a difficult year for the global economy, but Vietnam progresses in macro economic management and inflation control. This has contributed to stabilizing the foreign exchange market and foreign currency reserves, and reducing inflation. Kwawa urged Vietnam to continue tightening macro economic policies until it reaches inflation targets and gains the market’s trust.

A UN representative in Vietnam said that the country has reached the development level of the most successful countries in the region, helping millions of people escape poverty. But Ms. Pratibha Mehta, UN Resident Coordinator, also urged Vietnam to prioritize stabilizing its macro economy to curb high inflation. She believes the economic growth is essential to reducing poverty.“While budget tightening is very important, we recommend that it is not at the cost of reducing investment in povery reduction and social protection. The UN stands ready to support the government , the UN welcomes the government’s decision to establish a new model for economic growth and strongly advocates for the inclusive green growth,” said the UN Resident Coordinator in Vietnam.

Consultative Group delegates believe Vietnam will continue to face challenges next year due to an unstable macro economy and high inflation and interest rates. World economists say that in 2012, major economies such as the US, Japan, and the EU will continue to suffer from massive budget deficits and high public debt. This is a grave threat to the world economy. But commitment of nearly 7.4 billion USD in ODA to Vietnam at this year’s Consultative Group Meeting and a pledge that international development partners will continute to help Vietnam deal with economic challenges give evidence of strengthened international confidence in Vietnam’s economic strategy.

Vinh Phong