The economic recovery depends heavily on new policies and trimming fat from the State budget, Vu Viet Ngoan, National Financial Supervisory Commission chair, told Thoi bao Kinh te Viet Nam (VN Economic Times)
Do you think the 5.8 per cent GDP set for 2014 is ambitious?
No, I don't think it is ambitious. In my opinion, the situation will be much better over the next two years as our macro economy becomes more stable and the Trans-Pacific Partnership comes up for signing. This will help Viet Nam become attractive for foreign investors.
Meanwhile, private investment will improve, thanks to Government policies supporting production and measures to restructure the banking system and settle bad debts. In the next two years, it is projected that our exports will increase, particularly in the foreign investment sector.
However, there are still many challenges. Many enterprises are still facing difficulties and challenges, particularly those involved in agriculture. In 2014, our financial balance will continue to be in a difficult situation as national revenue mainly depends on the efficiency of investment capital.
The target of 5.7-5.8 per cent GDP set for the next year requires all economic sectors to overhaul their efforts. If the target is achieved, it will become a driving force to stabilise our macro economy and help enterprises to restore normal production.
Do you think that there is a contradiction between high economic growth rate and efforts by the Government to control inflation?
Macro economic stability should be considered a core value. However, if we focus too much on inflation control and keep giving priority to stabilisation at the expense of economic growth and rational social investment, we may further push enterprises into distress.
As a result, in the long run our macro economy would become imbalanced. In my opinion, we should not tie efforts to stabilise the macro economy with efforts to increase the economic growth rate.
We have been successful in putting a cap on inflation for several months - about 7 per cent. This is a positive sign, a firm foundation for mid-term inflation stabilisation. In such a scenario, it is time for us to define our immediate tasks on how to cope with the present low growth rate.
In the meantime, we have to take serious action to restructure our economy. Only by doing so can we raise productivity and avoid fragmented and ineffective investment, which is the main factor leading to our unstable macro economy.
Does that mean our economy will not face any risks in the next two years?
Yes! But everything must go according to plan. Reality has shown that our development orientations and measures are great. Yet the implementation is not as good as expected. The close co-ordination between Government agencies during the implementation remains a hot issue.
In other words, whether our economy will be restored or not, it depends on many factors, particularly good co-ordination between government agencies.
In your opinion what are the hardest problems to solve before we achieve a growth rate of 5.8 per cent for 2014?
Achieving a budget balance and helping enterprises to "get out of the bush" are the two major challenges for our economy. There is no light at the end of the tunnel for the balancing of the national budget at present, even for 2014.
It is projected that in 2013, the discrepancy between revenue collection and the spending will be about VND 59.43 trillion ($ 2.8 billion).
The 2014 situation is also very gloomy. In my opinion, to solve this problem, in the long run, it is important to develop a mid-term plan to ensure a stable State budget, while developing a plan to reduce the number of public employees whose salaries depend on the State budget.
Although the Government has issued various policies to help enterprises to restore their production, the situation is not much improved. I think the Government should continue to find a way out for enterprises. — VNS