Inflation In Vietnam Essay

2176 Words 9 Pages
Register to read the introduction… In an interview with Thanh Nien Daily News, H.E. Dr. Le Danh Vinh, Vice-minister of Trade stated that the government did not respond quickly and effectively enough and that’s why inflation has raised this high. He said by the first quarter of 2008, the government realized that it was time to act but there weren’t any coordinated measures among government agencies and ministries. Since mid-2007, policy has been used to rein in the credit expansion – by raising reserve requirement and the base, discount, and rediscount interest rates. However, the tightening of liquidity forcing banks to buy VND20 trillion (US$1.26 billion) has badly affected the credit …show more content…
In general, the pattern of income distribution tends to become more imbalanced than it was before inflation. People who receive fixed money incomes are usually disadvantaged because their incomes are not adjusted fast enough to balance for the effects of continuously rising prices. They are teachers, construction workers, pensioners, beneficiaries who will all suffer the worst consequences of inflation. Meanwhile, people whose incomes rise faster than the inflation rate will experience increasing real incomes. They are individuals with money to buy real assets such as property, gold and antiques, which often increase in value faster than the rate of inflation. “Those dependent on assets with fixed nominal values, such as savings accounts, pensions, insurance policies, and long-term debt instruments, suffer erosion of real wealth; other assets with flexible values, such as real estate, art, raw materials, and durable goods, may keep pace with or exceed the average inflation rate.” (Funk & Wagnalls New Encyclopedia, 2006, World Almanac Education Group). In the article Vietnam Imports Inflation from VietNamNet, February 22, 2008, Phuong Loan stated that in a country with a high population and a high population growth rate like Vietnam, the number of poor people may increase with high inflation. Poor people who rely on their daily income cannot protect themselves and only a small …show more content…
Dr. Thai Van Can, a consultant at the World Bank and IMF suggests that the government should take on reforms to direct capital inflows into productive uses. These include accelerating the equitization of public enterprises, reforming the land use system and accelerating financial sector reform (How can Vietnam cut its 15% inflation, Thanh Nien Daily News, March 19,

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