The Vietnamese government is launching a new resolution, Resolution 11, in an attempt to curb inflationary pressures. In the last year consumer prices have risen 17.5% and the dong has been devalued to the dollar six times in that same span of time. In hoping to find something more stable many people are turning to gold, in fact DongA Bank recently installed an ATM that dispenses gold bars. It appears that Vietnam’s government is doing everything it can to fight inflation, narrowing its focus to tightening its money and credit, cutting the budget deficit, and controlling state-owned enterprises. It appears that these are realistic goals for Vietnam as they have become the “world record-holder for debt creation” according to a particular private credit measure. Sticking to their script government recently capped interest rates offered on dollar deposits at 3% and promises to cut public investment as well. Only time will tell if this resolution will work and if Vietnam can continue its 7-8% growth rate in the next few years.
-Tommy Walker
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