Vietnam needs more economic reforms to bolster confidence: donors

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International development partners hailed Vietnam's initial success in restoring economic stability, on Thursday, and called for further reforms through 2012.

Vietnam's one-day mid-year Consultative Group meeting in Ha Tinh Province included a thorough discussion and assessment of Vietnam's Resolution 11, which was launched in February, the World Bank said in a statement.

At the meeting, Minister of Planning and Investment Vo Hong Phuc said the government has made inflation control, macroeconomic stabilization, and social security its top priorities.

Resolution 11 was issued to implement these objectives, he was cited as saying in the World Bank statement.

While recognizing initial progress, bilateral and multilateral donors encouraged the government to direct more attention to the "structural origins" of instability. Future steps towards improvement would include the creation of sound fiscal policy and the improved disclosure of economic data and information.

The donors also pledged their support for the long-term implementation of Resolution 11.

IMF's Senior Resident Representative, Benedict Bingham, noted that "while there has been some initial success, confidence in the overall success of the strategy remains fragile".

He added that, to bolster confidence, the government will need to send a strong signal that Resolution 11 will be sustained beyond 2011.

Alastair Cox, Australia's Ambassador to Vietnam, said development partners welcomed Resolution 11 and the government's strong commitment to its full implementation to restore and sustain market confidence.

"This may, however, take time, well into 2012," he said. "We remain concerned that Vietnam will continue to suffer recurrent bouts of macro-economic instability unless significant reforms are implemented."

Earlier this month, Vietnam raised its annual inflation target to 15 percent and brought down its new economic growth target to 6 percent.

The development partners urged the government to provide better social protections to poor and vulnerable people during periods of economic instability and high inflation.

"We welcomed the government's efforts to strengthen social protection, unemployment insurance and emergency assistance to the poorest households," said Sean Doyle, EU Ambassador to Vietnam. "We wish the government every success in these efforts and particularly encourage it to channel the aid as well as possible to the poorest people, who really need it."

The full Consultative Group meets every year, usually in December, to help provide consultancy to Vietnam's development. Informal mid-year meetings have been held in Vietnam since 1998, usually in May or June.

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