On February 24th Mr Dung approved a package of other policies designed to control inflation, including plans to rein in domestic credit growth to below 20% this year (compared with a previous target of 23%, and down from 28% in 2010), limit the growth of money supply (broad money, M2) to 15-16% this year and do more to slow lending towards speculative activities, such as buying real estate or stocks. At the same time policymakers have also been making plans to increase revenue collection in order to reduce the size of the country's budget deficit, which the government is now hoping to restrict to below 5% of GDP, compared with an earlier target of 5.3%. Various ministries, meanwhile, have been ordered to cut spending by 10%. It appears likely that Vietnam's policymakers will introduce further tightening measures in the months to come.

The consumer price index (CPI) rose by 12.3% in February, compared with 12.2% in January, and the latest round of devaluations of the dong is expected to push the CPI higher in the short term as the import bill rises. A recent increase in subsidised retail electricity and fuel prices is expected to further add to inflationary pressures in Vietnam. Electricity prices rose by 15% on March 1st, following an increase in fuel prices on February 24th, with petrol prices rising by 17% and diesel prices being set 24% higher. This comes at a time when some other Asian countries are expanding or increasing fuel subsidies in an effort to combat rising oil prices, which have been increasing owing to rising uncertainty over the supply of fuel from the Middle East. Diesel has a direct relationship with inflation. Besides being an important fuel in its own right, diesel also powers the trucks that bring produce to cities. Any rise in the price of diesel results in a quick increase in food costs, which make up a large proportion of Vietnam's CPI.

It is unclear whether these latest policy shifts are indicative of a lasting re-ordering of the country's economic priorities. Vietnam has pursued aggressive pro-growth policies for several years, and concerns abound over whether policymakers have the political will to follow through on tightening monetary policy. At the CPV congress in January officials came out once again in favour of adopting a pro-economic growth policy stance and left the inflation target unchanged from last year, at 7%. In previous years Vietnam has been quick to stimulate its economy once the immediate inflationary threat is seen to have passed. In 2008 inflation rose to a high level of 28% on an annual basis before the 2008-09 global economic recession dampened demand and moderated prices. In 2010 policymakers initially introduced a hard monetary policy stance to prevent prices from rising again. In the middle of the year, however, they loosened monetary policy again, believing that the economy was stable enough to proceed with a rapid expansion of credit. That decision contributed to the return of double-digit inflation rates by the end of 2010. There remains every possibility that if the inflationary risks were seen to be receding, policymakers may once again choose to fuel growth prematurely.