Key solutions for controlling inflation, stabilizing macro-economy, and ensuring social welfare

RESOLUTION

On key solutions for controlling inflation, stabilizing macro-economy, and ensuring social welfare

In the implementation of the NA’s Resolutions, the Government promulgated its Resolution No. 02/NQ-CP, dated on January 9, 2011, on key solutions for the realization of the socio-economic development plan and State budget plan for 2011. However, the world economic picture has been changing complicatedly with rising inflation, and escalating prices of crude oil, input materials, foodstuff. Domestically, natural calamities and bad weather adversely affected production and people’s life; the prices of some key input commodities, which are not yet fully decided on the basis of market rules, had to be adjusted higher;  on the other hand, we had to loosen monetary and fiscal policies to prevent recession, to maintain economic growth during the past time. The situation leads to price hike and threatens macro-economic stability in our country. Thus, focusing on inflation curbing, macro-economic stabilization, and social welfare guarantee is the urgent and central task now.

To realize the task, the Government requires ministers, heads of ministerial-level agencies, Government’s bodies, Chairmen of provincial and centrally-governed cities People’s Committees, Chairmen of management boards and members’ councils, General Directors of State-owned economic groups and corporations to focus on the following solutions:

1. Applying tight and cautious monetary policy

The State Bank of Việt Nam will be responsible for coordinating with ministries, sectors and localities to:

a) Apply tight and cautious monetary policy, harmoniously combine the monetary policy with the fiscal one to rein in inflation; regulate and control the credit growth at less than 20%, total payment means at around 15-16%; focus credit capital on acceleration of production and business, agriculture, rural areas, export, supporting industries, small and medium-sized enterprises; lower the rate of credit loans of non-production sector, particularly real estate and securities .

b) Regulate monetary policy tools in an active, flexible and effective manner, especially interest rates and volume of money supply to control inflation.

c) Regulate flexibly the exchange rate and foreign exchange market, in accordance with market movements. Enhance management over foreign currencies, take necessary measures to make organizations and individuals, first of all, State-owned economic corporations and groups sell foreign currencies to banks and buy back when they have proper demand to ensure the liquidity of foreign currency, to stabilize exchange rate, to meet the requirement for stability and development of production and increase of foreign reserve.

d) Exercise strict control over gold trading; in Q2, submit to the Government for issuance of a Decree on managing gold trading activities towards the centralization of gold importers, then step by step eradicate the trading of gold bars on free market; effectively prevent cross-border gold smuggling activities.

e) Closely coordinate with the Ministry of Public Security, the Ministry of Industry and Trade, provincial and centrally-governed People’s Committees, and competent agencies to check and supervise the observation of regulations on exchanging foreign currencies and gold trading. Promulgate regulations and  sanction schemes, including the suspension or withdrawal of business licenses, confiscation of property; issue regulations on rewards for discovering activities infringing stipulations on buying in and selling out of foreign currencies and gold. Give strict punishments as provided by law against offenders.

2. Applying tightening fiscal policy, cutting down on public investment and State budget overspending

a) The Ministry of Finance will coordinate with other ministries, agencies and localities to:

- Strive to increase budget collection by 7-8% compared to the preset target approved by the NA. Enhance inspection and supervision over tax collection to avoid losses; focus on handling with delayed tax payment, take measures to force payment of  tax debts and to reduce new debts.

- Ministries, agencies and localities proactively re-arrange their specific tasks to save 10% of items of expenditure in the  remaining nine months of 2011 (excluding salary and related items). They will calculate their own saving figures, then inform the volumes to the Ministry of Finance to sum up and report to the PM by March, 2011. Ministries, agencies and localities will manage themselves the saved volumes; since the Q3, the Government will consider State budget allocation to urgent tasks arising from the estimated plan or send back to the Ministry of Finance. Halt to purchase new cars, air-conditioners, office tools; minimize expenditure on electricity, water, office stationery, petrol; stop allocating money for work items that are not really urgent. Heads of agencies, bodies and localities, who are using the State budget, are responsible for maximally curtailing expenditure on organizing meetings, conferences, domestic and foreign visits, etc. Additional State budget will not be allocated, except cases relating to the settlement of consequences of natural disasters and epidemics which will be approved by the PM. Offenders will be timely and transparently given strict punishments.

- Reduce 2011 State budget overspendings down to less than 5% of the GDP. Closely supervise SOEs’ foreign loans and debt payment, particularly short-term loans. Review the Government’s debt and national debt, limit incremental debts, not to expand the list of borrowers and scopes of debts that require Government’s guarantees . Make sure that the Government’s debt, pubic debt, foreign debt are  within the limit of national financial safety .

b) The Ministry of Planning and Investment will be responsible for coordinating with other ministries agencies and localities:

-  Not to advance capital allocation of 2012 State budget and Government-bond capital to projects, except those on urgent prevention and surmounting of consequences caused by natural calamities.

-  Not to prolong the disbursement schedule of the State budget and Government-bond capital items allocated for 2011, recollect these items to supplement resources for projects to be completed in 2011.

-  Set up inspection teams to review all projects funded by the State budget and Government-bond capital, identify those that should be cancelled, postponed, deffered in implementation schedule in 2011; recollect or transfer allocated capital items which are not urgent and  not aligned with the main aims, then report and put forth measures to the PM in March, 2011.

- Inspect and review investment activities of the State-owned economic corporations, groups and enterprises, submit to the PM measures to reject unnecessary or ineffective projects, including overseas investment ones.

c) The Development Bank of Việt Nam cuts down at least 10% of its credit investment plan funded by the State.

d) Ministries, ministerial-level agencies, and localities to:

- Delay time to launch new projects funded by the State budget and Government bonds, excluding those projects on urgent prevention or overcoming of consequences of natural disasters, of national importance, or ODA-funded ones. To review, cut, re-arrange projects so as to re-allocate State’s capital for key ones that need to be completed in 2011.

- Report to the PM, by April this year, the list of projects funded by the State and SOEs that should be cut down on, then inform the Ministry of Planning and Investment to totalize and report to the Government in its regular meeting for May, 2011.

e) SOEs will review and cut down or re-arrange investment projects, focus on their main business lines, report to the PM, within April, the list of projects to be cut down on with investment capital, then inform the Ministry of Planning and Investment totalize and report to the Government in its regular meeting for May, 2011.

3. Boosting production and business, encouraging export, curbing inflation, reducing trade deficit, and saving energy

a) The Ministry of Industry and Trade will be responsible for coordinating with other ministries, agencies, and localities to:

- In the Q2/2011, enact and organize the implementation of measures on regulating supply-demand balance of essential commodities with proper combination between domestic production and import-export of these commodities; continue removing timely barriers and obstacles to boost production and provision of goods and services; effectively regulate rice export, coordinate with the Ministry of Finance to regulate the rice reserve to ensure the national food safety; keep close watch at the changes of domestic and foreign markets so that measures to stabilize the market, especially key commodities would be taken timely. Prepare ways to prevent speculation and price escalation.

- Develop plan for regulating export and import, strive to lower trade deficit to less than 16% of the country’s total export turnover. Develop process and rules to control import of goods, materials, equipment for projects funded by the State budget, Government bonds or the SOEs; coordinate with the Ministry of Finance to check and supervise the strict observation of the PM’s Directive on consuming domestically-made goods and materials, especially in projects that use imported inputs; actively apply proper measures to control import of  comsummer’s goods and reduce trade deficit.

- Direct the Electricity of Việt Nam, and its affiliates to develop plans to take full use of the capacity of power plants to meet the demand in dry season, with priority given to production; coordinate with provincial and centrally-governed People’s Committees to ensure economical use and proper provision of power for vital needs of production and people’s life.

b) The Ministry of Finance will be responsible for collaborating with ministries, agencies and localities to:

- Proactively take necessary measures on tax and fees  to adjust profits from exporting steel, cement, etc, in case the prices of several input materials are still lower than the market prices.

- Consider tax reduction and exemption, or defer the deadline of tax payment for imported input materials that the local supply is not adequate for the production of commodities such as garments and textiles, footwear, aquaculture, cashew nuts, timber products, and pharmaceuticals; continue to repay the value added tax for exports in 2011.

- To closely monitor and supervise the declaration and application of special preferential import tariffs under the commitment of free trade agreements, tax preferential policies in free-tax zones. Review to reduce tariffs against  input materials for production that the  domestic supply is not yet made; consider the raising of tax to proper levels against some exports which are not encouraged, including natural resources and raw materials.

c) The State Bank of Việt Nam will ensure adequacy of foreign currency for the import of essential commodities that domestic production can not cover fully; to limit loans for import of commodities that are not encouraged, on the basis of the list precribed by the Ministry of Industry and Trade.

d) The Ministry of Agriculture and Rural Development will be responsible for coordinating with other ministries and localities to assist or encourage agriculture and rural development, to increase export, to create jobs, to raise people’s incomes, and to ensure food security.

e) The People’s Committees of provinces and centrally-governed cities, particularly Hà Nội, Hồ Chí Minh City, based on their real conditions, will direct the uninterrupted production, reserving, distribution of goods, first of all, essential commodities like food, foodstuff, fuel, etc; enhance management and stabilization over prices.

f) SOEs must tighten control of production costs, renovate management skills to improve business efficiency, making sure that prices of commodities are at reasonable levels; continue to speed up equitization and business restructuring; shift capital to their key business branches.

g) Ministries, agencies and localities will organize and expand inspection and supervision of the implementation of the regulations on electricity saving; develop and organize the implementation of the power-saving program, strive to save 10% of power use as stipulated in the Government’s Resolution No. 02/NQ-CP; at the same time, apply necessary measures to encourage businesses and people to save energies (electricity and fuel) and to use high-tech, green-tech, clean-tech equipment to save electricity.

4. Adjusting prices of electricity and fuel in combination with assistance to poor households

a) To continue implement the roadmap of market-driven fuel and electricity price adjustment.

- The Ministry of Finance will actively regulate fuel prices in accordance with the Government’s Decree No. 84/2009/NĐ-CP dated on September 15, 2009 on fuell trading, making sure that the domestic  prices are adjusted closely in line with the world’s  prices.

- In 2011, electricity prices will be adjusted partially; the Ministry of Industry and Trade will perfect and submit to the PM for approval market-oriented mechanism of power price regulation in Q1/2011.

b) The State will adopt policies to assist poor households after the power prices are increased.

5. Strenthening social welfare

a) The Ministry of Labor, Invalids and Social Affairs will be responsible for coordinating with other ministries, agencies and localities to:

- Synchronously deploy social welfare policies under the approved programs, projects, plans; speed up the implementation of measures to ensure social welfare as stipulated in the Government’s Resolution No. 02/NQ-CP.

- Focus on assisting poverty reduction in local level, particularly in extremely poor communes, villages; assist poor households and localities to export manpower; provide loans for students

- Direct agencies and localities to fully and timely implement regulations on assistance to social welfare beneficiaries, people with meritorious services to the country, people with specially difficult living conditions (lonely old age, without supporting relatives, etc )

b) The Ministry of Finance will coordinate with the Ministry of Planning and Investment, other ministries, agencies and localities to allocate capital to assist localities to deploy social welfare policies in accordance with the new poverty benchmark .

c) The Ministry of Labor, Invalids and Social Affairs will be responsible for coordinating with the Ministry of Finance, the Ministry of Industry and Trade and other ministries, agencies and localities to direct the implementation of the policy on assisting poor households after the power prices are adjusted to make sure that the assistance benefits the right people.

6. Speeding up information dissemination

a) The Ministry of Information and Communications will be responsible for coordinating with the CPVCC Commission for Popularization and Education and bodies in charge of controlling mass media agencies to:

- Direct the mass media agencies, based on the Party and State’s guidelines and policies as well as the content of this Resolution, to provide  the masses with update information, particularly in the fields of finance, money, prices, social welfare policies, policies on assisting poor households directly affected by the adjustment of electricity prices, so as to create social understading and consensus.

- Give strict punishments to the provision of untrue information relating to the Party and State’s policies on controlling inflation, stabilizing macro-economy, and ensuring social welfare.

b) Ministries, agencies, and Party’s central commissions, People’s Committees of provinces and centrally-governed cities will actively timely provide update and precise information to the mass media agencies, especially issues of widespread social concern.

7. Organizing the resolution implementation

a) Ministries, ministerial-level agencies, Government’s bodies and People’s Committees of provinces and centrally-governed cities will proactively and strictly implement this Resolution; review monthly, quaterly the outcomes of the implementation of the Government’s Resolution No. 02/NQ-CP and this Resolution, report to the PM and inform the Ministry of Planning and Investment to totalize and report to the Government at its monthly regular meeting.

b) The Ministry of Planning and Investment:

- To supervise the implementation of the Resolution by ministries, agencies and localities; totalize and report to the PM at the mid-month meetings of the Government’s leaders.

- Submit to the PM to report to the National Assembly about the comprehensive solutions for socio-economic development and macro-economic stability in March, 2011.

c) The Việt Nam Fatherland Front is assigned to coordinate with ministries, agencies, localities to direct its grass-roots  units to well organize information dissemination so that the business community and people can thoroughly and precisely understand this Resolution. Occupational associations will take actions to encourage the business community to actively follow the Party and State’s guidelines, policies and mechanisms and the content of this Resolution.

d) Ministers, heads of central agencies, Chairmen of the People’s Committees of provinces and centrally-governed cities, Chairmen of the management boards, member councils, General Directors of SOEs will be responsible to the Government and the PM for implementing this Resolution within their assigned competence.

The target of inflation curbing, macro-economic stabilization, and social welfare guarantee is not an easy task, however, with the country’s potentials after 25 years of renovation, the Party’s leadership, cohesive determination of the entire political system, consensus and efforts of all sectors, levels, business community, and people, we believe that the target will be successfully realized.