Inflation double growth rate: National Assembly

Published: 30/06/2011 05:00



VietNamNet Bridge – Discussing the social and economic situation in the first half of 2011 on June 30, the National Assembly (NA) Standing Committee was worried when inflation began to reduce but it was still at very high level.

Increased growth and high inflation

In the first six months of this year, Vietnam reported 14.3 percent growth in industrial value compared with the same period last year, Vo Hong Phuc, Minister of Planning and Investment told members of the National Standing Committee.

By late June, total budget collection stood at VND327.82 trillion ($16 billion) - or 55.1 per cent of the estimated value for the year. Budget spending itself was VND 355.6 trillion ($17.3 billion) or 49 per cent of the estimate. As a result, overspending in the first six months was VND27.78 trillion ($1.35 billion) – equal to 23 per cent of the estimate for the year.

“This is the lowest level of overspending compared with the same period in recent years,” Phuc said.

In his report on the socio-economic performance of the country in the past six months, Phuc noted the success in stabilising foreign currency and gold markets, the small margin increase of the Consumer Price Index (CPI), and the effective reduction of public spending.

However, in his report, Phuc conceded some constraints in the national economy, particularly the high interest rate which he said had impeded production and business. The current mobilisation interest rate stood at 15.5 per cent per annum, an increase of about 3 per cent compared with last year.

Regarding the socio-economic situation in the second half of this year and the first six months of 2012, Minister Vo Hong Phuc said the situation would remain difficult due to unpredictable happenings in the global economy which would affect the Vietnamese economy.

“To achieve an economic growth rate of 6 percent for the whole of 2011, the growth rate for the next six months must be higher than 5.6 percent of the first half,” Phuc said.

He said in the second half of the year, the Government had set the targets to cap the inflation rate at about 15-17 percent, the imbalance between imports and exports at 16 percent - and the overspending of the State budget at 5 percent.

Ha Van Hien, chairman of the Economic Committee agreed with the Government’s report presented by Minister Phuc. However, he cautioned that the high CPI would cause many difficulties for production and business as well as general living conditions.

“High interest rate and difficulty in credit access have forced many enterprises to slow down their production or some to even temporarily close down,” Hien said.

As a result, Hien raised the possibility of an increase in bad debt in the last months of 2011 and all of 2012.

He agreed that the Government’s decision to cut down public spending was the right decision. Yet the implementation of that decision in many localities still did not match the spirit of the decision.

Tran Dinh Dan, chairman of the NA Office, said the Government’s performance in the period under review had consolidated people’s confidence, particularly policies on social security. It had also helped stabilise society and the political system.

Commenting on the financial report delivered by Minister of Finance Vu Van Ninh, chairman of the Financial Committee, Phung Quoc Hien, asked the Government to focus more on long-term strategic solutions. For example, planning work, measures to stabilise the macro economy, sustainable development, the promotion of products having strong comparative advantages - and energy conservation.

NA vice chairman Nguyen Duc Kien said that the CPI in June was 13.29 percent, far exceeding the figure set by the government for the whole 2011, causing great difficulties for production, business and the people, especially three million poor families and 1.6 million poor-approaching families, around 22.1 percent of the population, as well as low and average-income earners in the urban areas.

“Inflation is double growth rate, the Vietnam dong devalues, the interest rate increases and all of these factors affect the job and real income of the people, not only low-income people but also businesses,” Kien added.

He said in the remaining months of 2011 it was imperative to consider various economic scenarios to come up with effective measures. In addition, he asked for further dialogue and accountability between relevant agencies while stepping up communication to create consensus in society.

According to representatives from the NA Committee for Economics and Budget; apart from objective reasons from the world economy, high budget overspending for many years and low effectiveness of investment are major reasons. The increase of prices of essential goods, the amendment of the forex rate and the increase of banking interest rate before the lunar New Year 2011 (in February), caused the increase of prices for all kinds of good in chain reaction.

Notably, the government asked the NA to increase the targeted inflation rate for 2011 to 17 percent, one month after the rate was increased to 15 percent one month ago.

Weapons draft

The NA Standing Committee on June 30 approved a draft ordinance on the management and use of weapons, explosives and supporting devices.

The move was made at the final meeting of the 41st session of the committee.

After it takes effect, all individuals and organisations not allowed to own or use weapons, explosives and supporting devices have to declare them and hand them over to authorities.

The NA’s National Defence and Security Committee presented the draft ordinance in six chapters and 38 articles.

The draft regulates the scope of the amendment, user responsibilities, weapons management and licences for military weapons.

It refers to sports weapon users, weapon production and the repair sector - and regulations on managing and using explosive material.

The draft focuses on weapons, explosives and supporting devices used in law enforcement, said chairman of the committee Le Quang Binh.

“In principle, those who are given these instruments should have rights that are closely linked to their obligations and responsibilities,” Binh said.

He also said heavy and modern weapons managed by the Ministry of National Defence should not be covered in the ordinance.

The draft makers also asked the NA Standing Committee to prohibit individuals from owning weapons and the Government would supply a list of prohibited weapons, Binh said.

According to the draft, two ministers of National Defence and Police are authorised to license, revoke, and suspend the licensing of transport for industrial explosives.

Chung Hoang

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