Vietnam will focus on fighting inflation in 2011 as the prices of some goods in the country aren't yet under control and growth has created risks to macroeconomic stability, the government said.
Inflation accelerated to 11.09 percent in November, the fastest pace since March 2009. Economic growth for 2010 may reach 6.7 percent and accelerate to as much as 7.5 percent next year, the government said in a report released Tuesday at a conference in Hanoi.
"Prices of specific products, including milk and medicine, have yet to come under adequate control," the government said. Vietnam's economic growth "has generated new difficulties to macroeconomic stability," according to the report.
Vietnam needs a "coherent package" of measures including higher interest rates to re-establish its monetary policy credibility and slow inflation, the International Monetary Fund said Tuesday.
The central bank said in a statement prepared for the conference it plans to prioritize macroeconomic stability and inflation control next year.
"The government is on the horns of a dilemma," Australia's Ambassador to Vietnam, Allaster Cox, told reporters at the conference.
"You've got the short-term needs for growth and employment generation, which are urgent to maintain social stability, and yet at the same time you've got to try and drive competitiveness and improve the economic engine to generate more efficiency to reduce the overheating."
Credit may grow 25 percent to 27 percent this year, central bank Governor Nguyen Van Giau said in the State Bank of Vietnam's statement.
Lending growth of even 25 percent "is too high," according to Masato Miyazaki, the IMF's division chief for the Asia and Pacific department, who also said in remarks prepared for the meeting that the Vietnamese government's actions often give an "impression" that it favors short-term growth "despite official statements to the contrary."
Recent economic growth has been fueled by a rapid expansion in fiscal policy and credit, the United Nations said in remarks prepared for the meeting.
Vietnam faces an "increasingly deteriorating macroeconomic outlook," the UN said, citing inflation, a current-account deficit and a weakening currency. "This is slowly eroding the public's confidence and that of international investors and global capital markets."
The implementation of "ad-hoc and trade-restrictive measures" to fight inflation such as price registration and import-licensing systems are unlikely to be sustainable and will contribute to hoarding, according to a joint Australian-Asian Development Bank statement to the meeting.