PM emphasises spending cut and strict control of public investment

17:02' 06/05/2008 (GMT+7)
In his 60-minute speech delivered at the third session of the 12th National Assembly, which opened in Hanoi this morning, May 6, Prime Minister Nguyen Tan Dung proposed that the NA reduce the growth target to around 7% this year.
The PM explained that at the end of 2007, the prices of crude oil, food and many other kinds of materials suddenly rose in the international market. The global economy, especially the largest economies in the world such as the US, Japan and China, is seeing signs of recession.
Vietnam is heavily influenced by the world economy so its CPI in the first four months of 2008 increased 11.6% while its trade deficit rose 71%.
“These are the highest levels in many years, threatening macro-economic stability and adversely impacting production, jobs, incomes and the lives of people, especially the poor,” Dung said.
Besides outside influences, Vietnam experienced record cold spells and cattle and poultry epidemics. The PM also identified five other internal reasons, stressing the Government’s fumbling in carrying out monetary and financial policies.
The PM also said that the government is weak at market research and forecasting. “At the end of 2007, the government saw a lot of advantages and opportunities and didn’t forecast new challenges and difficulties so it asked the NA to approve a high growth rate target for 2008 (8.5-9% of GDP growth) and the lower increase of CPI than GDP growth,” Dung said.
He said that some targets set at the 2nd NA session were no longer appropriate and he proposed the NA reduce the GDP growth target to around 7%.
“The focus and urgent mission is curbing inflation and stabilising macro economics, supporting the poor and victims of natural calamities,” the PM emphasised.
To realise social-economic goals in 2008, the PM introduced eight groups of solutions, stressing a tightened financial policy which concentrates on spending cuts, strict control of public investment. Another important solution is promoting exports and decreasing the trade deficit.
The PM confirmed that the government will not increase power, petroleum, coal, clean water, airfare, train and bus fares till inflation is controlled.
“For the petroleum price, if the price in the international market suddenly climbs, the government will consider specific and appropriate measures,” Dung said.
As regards social welfare policies, the PM said the government will amend the salary increase roadmap, continue allocating rice for victims of natural calamities and maintain the levels of school and hospital fees.
According to Dung, the government allocated around 80,000 tonnes of rice for disadvantaged families in 2007 and the first four months of 2008, the highest level so far.
The NA Economic Committee agreed with the PM’s proposal of cutting the economic growth target but it asked the government to comprehensively research the subject before approving the amendment because slow economic growth may influence job creation and people’s incomes.