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Both high economic growth rate and low inflation targeted for 2010   2010-01-21 - VietNamNet/VNE

To curb inflation and ensure high economic growth, Vietnam may be forced to accept changes in monetary and fiscal policies in 2010, according to Deputy Chairman of the National Finance Supervision Committee Ha Huy Tuan.


Deputy Chairman of the National Finance Supervision Committee Ha Huy Tuan

VnExpress: The business community has paid special attention to a recent HSBC report predicting that Vietnam’s consumer price index would be 10 percent in 2010, while the basic interest rate would rise to 12 percent. What would you say about HSBC’s forecasts?


Ha Huy Tuan: I think that HSBC has its own reasons for offering such forecasts. HSBC is not the only institution providing predictions that differ from Vietnam’s targets.


They might present such a forecast because they think that loosened monetary policies in 2009 will lead to high inflation in 2010. Vietnam expects a high economic growth rate of 6.5 percent in 2010, which means that it cannot tighten excessively its monetary and fiscal policies.


However, these are just forecasts. Everything still depends on the way the Government reacts to actual circumstances. I believe the Government set up growth targets and flexible policies only after careful consideration.


VnExpress: What do you mean by ‘flexible policies’?


Tuan: ‘Flexible’ means ‘changeable’. However, any alterations should be made only after thorough consideration of the situation and related factors. Long-term strategies will not change, but policies can be adjusted to fit different periods.


In order to curb inflation, we need to tighten both the monetary and fiscal policies at certain levels. In order to develop the economy, these controls should be reasonable for businesses. Meanwhile, in order to ensure social security and stimulate the national economy, it is necessary to use fiscal policies. Trade policies are always very important. If we can use all the trade, monetary and fiscal policies in harmony, we will be able to reduce the trade imbalance.


VnExpress: In general, businesses are always afraid of the risks from flexible policies. What should we do to minimize the risks?


I think that there are three things we need to do. First, we need to intensify dialogues between businesses and policy makers. Second, government agencies, when considering any policies, need to figure out their possible impact on businesses and other policies. Third, government agencies should inform businesses in advance about changes to avoid shocking the enterprises.


VnExpress: Some days ago, the interbank interest rate increased so sharply that the State Bank had to intervene in the market. What would you say about that?


Tuan: I think that we should analyse the situation to find out if bank liquidity is really problematic in the long-term, or if this is just a short-lived problem. If the problem is temporary, then we can be sure that everything will return to normal.

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