Last week, Union finance ministry’s chief economic advisor, Kaushik Basu, used the example of Vietnam to underscore how fiscal and monetary policies were losing their effectiveness in controlling rampant inflation.
However, Vietnam’s central bank today reached out with the reassurance it was on the top of things in an economy where the year-on-year inflation rate reached 17.5 per cent in April, the highest since 2008. Nyugen Van Giau, Governor of the State Bank of Vietnam, emphasised the recent actions undertaken by the government were beginning to “show positive results” and the situation was “under control”.
His comments come days after the central bank raised key rates for the second time in a month to dampen spiralling prices, which have been supported by recent increases in the cost of electricity and fuel.
In February, the government issued a directive aimed at curbing inflation, stabilising the macroeconomy and ensuring social protection after the country’s consumer price index rose by 9.8 per cent in 2010, against a target of 7-8 per cent. The directive has pushed for the pursuance of tighter fiscal and monetary policy, as well as encouraging exports and controlling trade deficit.
Giau, who was speaking at a press conference preceding the Asian Development Bank’s 44 th annual meeting, said “all necessary measures to stabilise the economy” had been implemented and the bank, along with the government, “was determined to curb inflation”.
He however, stressed that inflation was a problem “not just in Vietnam but in all emerging countries”, including Indonesia and India. However, when questioned whether the country’s current inflation situation could mean that Vietnam would have to choose a slower growth path, Giau remained non-committal. He later added the Southeast Asian nation’s biggest achievement since initiating reforms 25 years ago was it “has developed and now joined the middle-income (countries) group”.
