VietNamNet Bridge – While the International Monetary Fund (IMF) and the World Bank (WB) said that inflation has strongly risen in Vietnam and it may reach a two digit number this year, the Vietnam Minister of Planning and Investment said that the government is trying to keep “inflation under control” at the forecast level of 8.5 percent.

High inflation and the devaluation of the Vietnam dong (VND) were the main topics at the Consultative Group Meeting (CG) of international donors for Vietnam, which opened in Hanoi on December 7.

Donors worried that these issues may hurt their trust on Vietnam’s macro-economic stability.

A WB report says Vietnam’s inflation rate for November was 11.1 percent and it was 9.6 percent for the January-November period. The inflation rate for food this year is up to 14.8 percent, the highest since April 2009. The bank forecast the country’s inflation for 2010 will be 10.5 percent, higher than the National Assembly’s planned 8.5 percent.

Masato Miyazaki from the IMF also said that Vietnam’s inflation this year may reach two digit rate. He urged Vietnam to tighten its monetary policy to resume orderly conditions in the forex market and control inflation.

According to IMF, credit growth may exceed Vietnam’s goal (25 percent) and this is very high for the economy. Trade deficit was $1.3 billion in November.

The IMF also expressed its worry over the devaluation of the Vietnam dong since the summer.

Miyazaki said Vietnam needs to give priority to addressing emerging risks to its macroeconomic stability, further tighten monetary policy and lower its public debt-to-GDP ratio.

Minister of Planning and Investment Vo Hong Phuc said that the Vietnamese government is trying to keep inflation under control and Vietnam expects to keep inflation at less than 7 percent in 2011.

Japanese Ambassador to Vietnam Yasuaki Tanizaki said that the Vietnamese government should take strong measures to recover the trust of donors on the Vietnam dong and to quickly stabilize its monetary market.

The governor of the State Bank of Vietnam, Tran Van Giau, said that the bank has adjusted the key interest rates and began to tighten the monetary policy. He also introduced three groups of solutions to adjust the monetary policy.

The Asian Development Bank (ADB) said that Vietnam’s monetary tightening policy announced in November is positive but insufficient. It suggested that Vietnam should have a long-term, clear monetary policy to have lower inflation rate.

The WB said that Vietnam should ensure the consistence in the goals of its monetary policy to avoid a sudden change of the monetary policy.

It said that Vietnam attaches more importance to high growth rate than maintaining macro-economic stability. When the country faces high inflation, the government uses administrative mechanisms to control it, though these measures are only used in necessary cases.

Donors urged Vietnam to strengthen its budget to reduce the ratio of public debt/GDP.

The new UK Ambassador to Vietnam, Antony Stokes, questioned whether Vietnam will have the second Vinashin (Vietnam Shipbuilding Industry Group)?

US Ambassador to Vietnam Michael W. Michalak applauded the Government’s priorities for “breakthrough” socio-economic progress, including improving infrastructure, human resources, and market-oriented mechanisms. Reform of the state sector is essential to improve productivity and efficiency of investment, he said.

He also inquired about the Vietnamese government’s plan to prevent another Vinashin in the future.

ADB Country Director Konishi said that Vietnam should better supervise and control state-owned enterprises to prevent risks and to create equal competition among economic sectors.

Minister Vo Hong Phuc confirmed: “Vinashin is a painful lesson for Vietnam. The Vietnamese government will not let any similar case happen.”

He said that Vietnam will strengthen its laws, for example the Law on Auditing, to raise the role of auditors and to ask state owned enterprises to make public auditing information.

Phuc said Vietnam is determined to conduct equitisation of state-owned enterprises.

Donors pledged to continue assisting Vietnam in its sustainable development.

United Nations Resident Coordinator John Hendra said that the UN is ready to support Vietnam to meet the vision set out in the draft Socio-Economic Development Strategy (SEDS) and the Socio-Economic Development Plan (SEDP) for 2011-2020, ensuring that all Vietnamese people can fully benefit from the country’s continued progress.

Masat Miyazaki, Division chief of the IMF’s Asia and Pacific Department, reaffirmed his institution’s commitment to providing Vietnam with sincere advice and support in the future.

As largest provider of aid and its second largest investor and trading partner, a representative from the European Union in Vietnam said that the EU will remain, throughout both the challenges and the successes, a firm and committed partner of Vietnam in its economic, social and political progress.

Xuan Linh