(VOVworld) – Curbing inflation, stabilizing the macro-economy, and maintaining an appropriate growth rate are goals set for next year. To realize these, the government has restructured the economy in terms of public investment, state-owned enterprises, the financial market, andthe banking system. To date, the sustainable growth model in combination with the restructuring of the economy has proven effective and kept inflation in check. To Tuan reports:

Banking system restructuring is a key to the restructuring of the financial market. (Photo: Internet)

In 2012, despite continuing economic woes, the Vietnamese government has insisted on restructuring the economy in combination with a sustainable growth model through implementing fiscal and monetary policies and balancing the state budget. The Prime Minister has approved a program to restructure state-owned enterprises, the financial market, the banking system, and public investment, considering it a key to the national economic restructuring. The move aims to make full and efficient use of resources and invest for a longer-term vision. Doctor Vu Dinh Anh is an economist ‘Vietnam should learn that in the context of restricted sources, investment capital needs to be poured into the most effective projects which should improve infrastructure but permit prompt payment of interest and principal to avoid public debt.’

The restructuring of economic groups and state-owned corporations has been asked to emphasize core businesses which respond to market demand and to not exceed management and financial capacity. The restructuring of state-owned corporations should concentrate on improving state management institutions, professionalizing the managerial apparatus covering human resources, regulations, setting profit goals, and transparency in operations and reports.

To restructure the national economy, the government has reformed the financial sector starting with the banking system. As part of the process, a policy to lower interest rates has been implemented in conjunction with reducing the inflation rate and managing the exchange rate to match market fluctuations to sustain the value of the Vietnamese dong. The improvement of gold market management and international balance of payments and the increase of foreign currency reserves has received due attention.

These strong measures have had a noticeable effect. The latest statistics show that Vietnam’s CPI increased just 0.31% over the past seven months, the lowest rate of increase in eight years. But the CPI climbed again in August and September and rose 0.47% in October and November. The target of keeping CPI growth under one percent this year is likely within reach. Despite weak markets this year, Vietnam is expecting GDP growth of 5.2%. Prime Minister Nguyen Tan Dung said at the monthly government meeting for November: ‘We should not be unrealistic although we have made a number of encouraging achievements. First and foremost, inflation and pricing should continue to be controlled though prices during the year-end months are predicted to rise only 1% - 7.5% for the whole year. Banks should increase credit to a suitable level to ease difficulties for enterprises and consider lowering interest rates in coordination with aggregate demand to control inflation in the future.’

The government has outlined a coordination mechanism in macro-economic management until 2020 under which the macro-economic stabilization will be aimed at cutting inflation and achieving higher growth than this year. National economic restructuring will continue in line with a revised growth model while ensuring social security and broadening external relations and international integration.

To Tuan