Monday, August 9, 2004
Vietnam cuts budget spending to curb inflation
Reuters Hanoi, August 9
Alarmed by rising inflation, Vietnam's communist government has ordered a budget spending cut of 10 per cent this year and a suspension of capital-intensive projects to keep the fast-expanding economy on track.
A directive by the prime minister called on relevant state agencies to make "price control" their priority in the coming quarters to fight inflation, state media reported. This year's prices are expected to be 12 per cent higher than 2003's.
The Vietnam Economic Times quoted the directive, which was sent out to all key ministries, as ordering a tight control of the prices of state-regulated goods and services such as telecommunication, fuel, steel, cement, electricity and rice.
The 10 per cent budget spending cut would scale back the communist government's plan to invest 53.5 billion dong ($3.4 billion) in infrastructure this year.
The 12 per cent inflation forecast, issued by the trade ministry last week, constrasts with an earlier finance ministry expectation of nine per cent inflation.
The trade ministry said prices of rice, the Southeast Asian's main staple, were expected to rise due to thin supplies and oil prices remained at record highs in Asia.
Government statistics showed inflation in the 12 months through July was 9.1 per cent, pushed up mainly by a 15.5 per cent surge in food prices in the aftermath of a bird flu epidemic.
Vietnam declared it was free of the deadly virus in March but the disease has re-emerged in the past month, mainly in southern provinces. Officials said they aimed to declare the virus eradicated by October.
Food prices account for 46.7 per cent of Vietnam's price basket, the central bank said.
© HT Media Ltd. 2004.