Big trade deficit, leading to current account deficit, is becoming a great threat for the Vietnamese government, Benedict Bingham, a representative from the International Monetary Fund, said at a conference on export situations in the first half and solutions for the second half held in Hanoi Jul 22.
The threat will place Vietnam into a doubled difficult situation, making the country, on the one hand, to increase foreign currency reserves or credit to offset balance sheet, on the other hand, to implement tight monetary policy to recover confidence of domestic and foreign investors.
The central bank tightening monetary policy to reduce trade deficit is right, but it needs to take care of technical methods to lower price hike, he said.
Noritaka Akamatsu, director of the World Banks Financial and Private Sector Development Program, shared the view, saying that the tight monetary policy helped slow down import growth, but it would put pressure on banks to join the interest rate race.
For a long term, Vietnam should curb import growth by boosting export and well implement the industrialization strategy to produce commodities replacing import items, the official said.
In addition, Vietnam needs to offset balance of payment through mobilizing long-term capital by developing securities and bond markets.
Bui Xuan Khu, Deputy Minister of Industry and Trade, said the government has take measures to curtail import, including reducing imports of luxurious items. Therefore, trade deficits have fallen over the past months, from US$3.2 billion in April to US$1.9 billion in May and to US$702 million in June.
Deputy PM Hoang Trung Hai has urged the ministry to closely monitor and control each import item in order to curb trade deficit below US$20 billion for the whole year.
According to the latest figures released by the General Statistics Office July 24, Vietnam&rsquos trade deficits are estimated to hit US$15.01 billion in January-July. (Vietnam and World Economy, GSO July 2008)
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