Dung, delivering a government report on day one of the National Assembly meeting in Hanoi yesterday, said the Vietnamese economy had been facing a host of difficulties since it entered the financial crisis a year ago.

The crisis has impacted heavily on the Vietnamese economy, particularly exports, investments and tourism, he said.

But effective government policies adopted in response to the crisis late last year, especially the interest rate subsidy scheme, have helped the economy regain growth momentum, he said, adding the macro economy had stabilised, inflation had been put under control, and social welfare had been maintained.

Total investment in the economy is forecast to reach 708.5 trillion dong this year, representing 42.2 percent of gross domestic product (GDP) and increasing 16 percent from 2008, Dung said.

MeanwhHe, state budget revenues are predicted at 390 trillion dong, the budget deficit at 6.9 percent of GDP and the ratio of national debt to GDP at 'around 29.7 percent which is still safe.

Rice exports have rebounded with this year's volume expected to hit an all-time high of about six million tonnes.

According to the government report on socioeconomic performance in 2009 and plans for next year, the economy will grow at 5.2 percent this year, in line with the revised target of the National Assembly.

Gross domestic product (GDP) in the first nine months of the year already expanded 4.56 percent year-on-year.

However, this economic growth is not sustainable as it is built on an inefficient economic structure, low productivity and poor competitiveness, Dung told lawmakers who are attending the month-long meeting.

Macro-economic balances are not solid while infrastructure, human resources and institutions for a market economy have not improved significantly, he said, and the crisis has caused difficulties for social safety and welfare programmes though spending on these programmes is up 62 percent from last year.

The inflexible foreign exchange policy has led to a shortage of US dollars in the official market as exporters have sat on the dollars expecting the dong to decline.

Expansionary monetary policy has caused concern that inflation might hit again, according to the government report.

On the back of those issues, he said, the government will take every possible policy measure next year to achieve higher growth than this year by improving the business climate, boosting exports, developing services, and rapidly mapping out an economic restructuring plan.

The government will continue the stimulus programme in a more effective way to prop up the economy, adopt new policies and step up economic restructuring in a way that expands the proportions of non-farm sectors.

The fiscal and monetary policies will be executed in a more prudent manner to ensure macro-economic stability, keep inflation from corning back, and reduce the budget deficit, Dung said.

He added the government would be working on housing programmes for ensuring social safety, and continuing administrative reform by cutting paperwork by at least 30 percent.

The Saigon Times Daily - October 24, 2009