Directive No. 43/TTg on Strengthening Inflation Control Work in 1996

DIRECTIVE

OF THE PRIME MINISTER

On Strengthening the Fight Against Inflation in 1996

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In recent years, while efforts to control and curb inflation have achieved certain results, these results have not been firmly established, and the risk of inflation resurfacing remains high. Therefore, controlling and managing inflation remain one of the important tasks for all sectors and levels in the coming period.

To effectively control and manage inflation, it is necessary to apply comprehensive solutions: Vigorously develop production, reduce production and circulation costs, thoroughly economize in spending, rapidly increase reserve funds, ensure major balances in the economy to achieve the planned economic growth rate; at the same time, it is necessary to accelerate the reform of economic management mechanisms in line with market mechanisms under state regulation, making positive factors of the market increasingly complete and developed.

Therefore, to implement the anti-inflation goal approved by the National Assembly, the Prime Minister requests that ministries, sectors, and localities promptly implement the following measures:

1. Concentrate all resources, improve labor productivity, thoroughly economize, reduce production costs to vigorously promote production.

The Ministry of Planning and Investment shall coordinate with relevant ministries and sectors to study and supplement general mechanisms and policies on economic management, ensuring major balances for the economy's rapid and sustainable growth; concentrate all resources to vigorously promote production with increasing efficiency; maintain and adjust the state-owned enterprise system to operate more effectively, properly organize the commodity distribution network; build sufficient reserve volumes, especially essential goods, to enable the State to intervene in the market, stabilize prices, create a favorable environment for enterprises to operate equally, participate in fair competition, and ensure smooth commodity circulation from production to consumption.

2. Measures concerning monetary and credit policies:

In 1996, controlling inflation requires restraining the total means of payment in line with the economic growth requirements, with a maximum increase of up to 21%; credit debt increases by about 21-22%; capital mobilization increases by 40-45%, with domestic capital increasing by 19-20%; continue adjusting interest rates and exchange rates in line with new socio-economic development requirements. To achieve these goals, the State Bank shall closely coordinate with the Ministry of Planning and Investment, the Ministry of Finance, and related ministries and sectors to firmly implement the following measures:

a) Continue developing the short-term capital market, consolidate the Treasury Bill market. The State Bank needs to cooperate with the Ministry of Finance to effectively manage these markets to promote economic growth, contribute to controlling inflation, especially during the Tet holiday.

b) The State Bank shall strictly control the total means of payment as planned; recover overdue debts, limit credit quotas, and enforce mandatory reserve ratios according to the Banking Law, remove Treasury Bills from the mandatory reserve structure, and correspondingly increase cash deposits in the State Bank accounts.

c) The State Bank needs to review experiences in managing the inter-bank foreign exchange market to make necessary adjustments to meet the requirements of foreign currency transactions between banks and economic organizations. The State Bank's purchase of foreign currency shall only be carried out upon the Prime Minister's Decision. Strengthen inspections and controls, and gradually implement the policy of "only Vietnamese currency circulating in Vietnam."

d) Alongside direct monetary policy tools, it is necessary to quickly apply indirect tools to manage market interest rates, regulate money circulation, and expand non-cash payments. From the beginning of the year, the State Bank shall monitor and inspect commercial banks' implementation of reducing lending interest rates compared to current levels to prepare plans to further reduce lending rates at the start of the second quarter of 1996.

3. Measures concerning the state budget:

a) Strive to increase revenue, thoroughly economize on expenditure to reduce the state budget deficit, increase financial reserves for the next year, ensure a solid and healthy state budget balance, which is a fundamental measure to help control inflation. All sectors and levels must consider directing revenue and expenditure as their primary task.

b) Alongside studying tax policy reforms, the Ministry of Finance, General Customs Department, and local People's Committees need to strengthen tax collection and anti-evading efforts, ensuring correct and full tax collection according to the law; coordinate with relevant sectors and levels to strictly manage taxpayers, combat smuggling, illegal business operations, false declarations of turnover, or delays in tax payments; organize audits and inspections of tax collection and payment; improve tax procedures to avoid inconvenience for taxpayers.

c) Ministries, sectors, localities, and grassroots units must strictly implement the Central Committee's Directive and the National Assembly's Resolution on thrift, combating waste and corruption, and smuggling; organize the management and use of state budget funds for their intended purposes, efficiently and responsibly for any improper expenditures, asset losses, or wasteful spending.

Budget expenditures should be within confirmed revenue sources and assigned plans; if state budget revenues do not meet the plan, corresponding reductions in expenditures must be made. The Ministry of Finance should study and improve the mechanism for allocating state budget funds to strictly control state budget expenditures.

d) Continue restructuring the state-owned enterprise sector to improve labor productivity, prevent capital and asset losses, and waste.

The Ministry of Finance should urgently complete the proposal for reforming the state-owned enterprise management mechanism to be submitted to the Prime Minister; widely implement the new accounting system in enterprises, strengthen supervision and guidance to bring enterprise financial activities into compliance with regulations.

4. Measures concerning supply-demand management, markets, and commodity circulation.

a) Implement measures to ensure smooth circulation of goods nationwide to prevent speculative activities, stockpiling, artificial shortages, price hikes, and damage to production and living standards. The Ministry of Trade shall take the lead, in collaboration with relevant ministries and sectors, to promptly develop a market management plan for consumer goods that aligns with a market mechanism under state regulation; establish a commercial network involving various economic components, with state-owned commerce taking the initiative to dominate the market. Market management must be tailored to the characteristics of each region: urban areas, rural areas, mountainous regions, southern regions, and northern regions.

b) Regarding the management of supply-demand balance for goods, the Ministry of Planning and Investment shall take the lead, coordinating with sectoral management agencies to establish an overall supply-demand balance according to the annual plan. Ministries and sectoral management agencies shall coordinate with functional agencies to monitor the supply-demand dynamics of goods within their jurisdiction; promptly identify and address any imbalances arising during management. The Ministry of Trade shall be responsible for harmonizing goods nationwide, particularly important commodities, to resolve localized imbalances in each region.

For important goods essential for production and daily life (foodstuffs, sugar, oil, cement, steel, fertilizers, paper...), supply-demand balancing must be conducted quarterly and monthly. For these goods, it is necessary to build a reserve circulation force, an indispensable tool for market regulation. Ministries, sectoral management agencies, and management councils of State-owned corporations managing these goods shall promptly submit to the Prime Minister proposals on reserve circulation mechanisms to ensure adequate reserves sufficient to influence the market when imbalances occur.

c) The Ministry of Trade shall urgently organize the implementation of Decision No. 864/TTg dated December 30, 1995, of the Prime Minister regarding commodity policies and the management of import-export operations in 1996; coordinate with relevant ministries and sectors to implement measures to ensure the balance between commodity and service forces and the total purchasing power of society. Direct and urge import-export enterprises to bring the majority of imported goods back to the country from the beginning of the year to meet domestic production and consumption needs in a timely manner; regulate import-export activities through rational organization of import-export channels, especially export of foodstuffs; Organize orderly purchase of export goods to prevent competitive bidding and price hikes. Study the formation of an import-export support fund to handle business risks.

d) To immediately curb signs leading to sudden price fluctuations, the Government Price Board must closely monitor market price trends, promptly grasp information on production, import-export, commodity circulation, and monetary conditions, and propose measures to stabilize prices throughout the year to assist ministries and sectors in managing production and business to form specific prices in accordance with state guidance.

To stop the frequent price increases at the beginning of the year, ministries and sectors need to strictly comply with the requirements of the Prime Minister in Directive No. 855/TTg dated December 29, 1995, on preparing forces, organizing commodity circulation, and stabilizing market prices during the 1996 Binh Ty Lunar New Year period. The Ministry of Labor, Invalids, and Social Affairs shall take the lead, coordinating with relevant ministries and sectors (Finance, Planning and Investment, Government Price Board...) to conduct surveys on wages, labor productivity, production costs, circulation, and price formation in representative units of national economy sectors to propose wage policies and measures linked to labor productivity for the production and business sector.

5. On directing management:

a) The Ministry of Planning and Investment shall take the lead, coordinating with the Ministry of Finance, the State Bank, the Ministry of Trade, the Government Price Board, the General Department of Customs, the General Statistics Office... to hold regular monthly meetings to thoroughly understand the dynamics of commodity and monetary movements, market conditions, and the balance between goods and money, thereby identifying weak links arising in management work and proposing timely solutions to the Government.

b) The price advisory group, headed by the Chairman of the Government Price Board, must accurately and promptly grasp information on domestic and international price trends, identify issues hindering commodity management, and report the situation to relevant ministries and sectors for resolution.

c) State-owned trading corporations, especially those dealing with important and essential goods, must regularly report production and sales situations of products under their management to superior management agencies and functional agencies, and bear responsibility before the specialized ministry for price changes of goods under their charge. Specialized ministries must bear responsibility before the Government for sudden price increases in goods under their management.

Based on the responsibilities and tasks assigned above, ministers of ministries, heads of ministerial-level agencies, government agencies, and chairmen of provincial and municipal people's committees directly under the central government shall direct units to strictly implement this directive.