he Wall Street Journal 24 March 2011

sources to repay banks, it said. Banks are also allowed to grant short-term foreign currency loans for exports, according to the statement. In order to get the loans, companies will have to ensure sufficient foreign currency holdings from exports to repay loans. Others loans demand will require documented approval from the central bank’s governor, according to the statement.



Prime Minister Nguyen Tan Dung’s government is struggling to contain inflation and narrow atrade gap that reached $12.4 billion last year, undermining the dong. Officials devalued the dong for the fourth time in 15 months on Feb. 11 to narrow the excess of imports over exports amid concern the nation may run short on capital needed to fund the deficit. Vietnam’s consumer prices rose 13.89 percent this month from a year earlier, compared with a 12.31 percent pace in February, according to figures released by the General Statistics Office in Hanoi today. That’s the highest figure since February 2009. The trade deficit widened to $1.15 billion from a revised $1.11 billion in February, according to preliminary figures released today.





Vietnam Economy Plagued by Imbalances

The Wall Street Journal 24 March 2011

Vietnam's inflation rate accelerated and its trade deficit widened in March, showing that imbalances continue to plague the economy and will keep up pressure on its ailing currency. Consumer prices surged 13.89% in March from a year earlier, the fastest on-year pace since February 2009, the General Statistics Office said Thursday, making it increasingly difficult for authorities to cap this year's inflation rate at 7% despite recently switching their focus from fostering growth to taming price pressures. At the same time, Vietnam's persistently high trade deficit widened to $1.15 billion in March from a revised $1.11 billion a month earlier, said the deputy minister of industry and trade, Nguyen Thanh Bien.

Exports in March rose to $7.05 billion from $4.85 billion in February, while imports increased to $8.2 billion from $5.96 billion, he said, adding that for the first quarter, Vietnam's exports rose 34% from a year earlier to $19.25 billion, while imports rose 24% to $22.27 billion. The trade deficit for the quarter was $3.029 billion, narrower than a deficit of $3.43 billion in the same period last year.

The General Statistics Office is expected to officially release trade data for March later this week or early next week, along with revised trade data for February. The worsening data comes after the government last month decided to alter its policy of focusing on growth, finally giving in to mounting pressure to produce policies that may help guide the economy back to a healthier position.

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ut we have to keep trying to implement the government's [tightening] measures," Nguyen Tien Thoa, head of the Finance Ministry's price-management department, said in a statement published in the central bank's Thoi Bao Ngan Hang newspaper. Mr. Thoa said the key reasons behind the rising inflation include the economy's large total outstanding loans, which exceed gross domestic product by 20%, and the inefficient use of investment capital. "It will take at least a couple of months before we can see if the measures really work," Mr. Thoa said.


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