Economic difficulties may last for one year: Deputy PM

VietNamNet Bridge – “We are facing a rather bad situation,” Deputy Prime Minister Nguyen Sinh Hung said during the opening of a government press conference on March 27.

He said Vietnam can’t surmount economic difficulties within several months and a 7.5% GDP growth rate is perhaps high for this year. In this situation, it is very difficult for Vietnam to accomplish the growth targets set by the National Assembly for 2008, under which the GDP growth rate is 8.5-9% and inflation lower than GDP growth.



“The global economy is declining but we have to keep calm. In the first three months of the year, foreign investment in Vietnam was US$5.4 billion, up 31% year on year. It shows that Vietnam is still a favourable destination,” Hung said.



The Deputy Prime Minister said the government’s top priority is controlling inflation. High inflation (over 9% in the first three months of 2008) greatly affects imports, exports and the people’s trust. From now to July 1 the government will not increase petrol, electronic and coal prices. If the world’s oil prices stay at the current levels, the government will have to spend VND12 trillion (US$750 million) to compensate for petrol losses this year. The government will ask ministries and state agencies to cut around 10% of their regular spending.



“The government will meet with economic corporations and big groups. It will be a problem if every corporation asks to increase prices. Economic difficulties will last for around one year and we have to suffer high inflation, but we will try to reduce inflation month by month,” Hung said.



He said the government will report to the National Assembly the adjustment of economic and inflation goals for 2008. In the first three months of the year, GDP growth reached 7.4% compared to 7.7% of the same period last year.



At the press conference, a representative of the Finance Ministry confirmed university and college fees will not increase in the next academic year. The Ministry also asked Hanoi to delay raising clean water charges. Previously, Hanoi planned to increase the water charge by 10-30%.



On March 25, Prime Minister Nguyen Tan Dung decided to loan VND30 trillion ($1.875 billion) to poor students in the next five years. The government will subsidise petrol for fishermen and help them buy new fishing boats.



(Source: VNE, VietNamNet)