Vietnam’s trade deficit expected to fall $3-4 billion for reduction in money supply

The government’s proposed measures will beat total demand, which will reduce about 100 trillion dong in money supply and $3-4 billion in the country’s trade deficit to ease pressure on inflation.

Above estimates were announced by the State Bank of Vietnam Governor Nguyen Van Giau as talking to the Sai Gon Giai Phong newspaper on monetary policy orientation as well as measures to stabilize macro economy and curb inflation for the coming time.

Giau emphasized, the prime minister summarized four measures related to financial policies to reduce total demand, including increasing budgetary revenues and bringing down the budget deficit to below 5%, lower the National Assembly’s previous target. Moreover, the country’s investment portfolio for 2011 will be re-arranged. The uncompleted works in terms of procedures will be transferred to following year while others with low efficiency will be stopped.

With the Central Bank, Governor Nguyen Van Giau’s proposal on 2011 credit growth at below 20%, even 18-19% was approved by the Prime Minister in order to reduce total demand in stead of the target 23% previously. This means that credit growth of 2011 will be reduced 50 trillion dong along with another 60 trillion dong cut due to four financial policy measures. Therefore, money supply will be cut 100 trillion dong in total estimate.

“When the measures are announced, enterprises will expect not to expand scope. Especially, importers of goods, input materials will be re-balanced to control import operations. I think, if having consensus, the measures will be implemented effectively. If the total demand is supposed to surpass 100 trillion dong (30-40% from importers), trade deficit automatically will fall $3-4 billion, causing positive impacts to the forex market and forex rate policy”, the Governor said.

Tags: Vietnam trade deficit 2011

Posted by VBN on Feb 21 2011. Filed under Economy News, Import-Export, Import-Export turnover. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry