The South Vietnamese Government has introduced special measures to combat growing inflation in the country.?
The South Vietnamese Government has introduced special measures to combat growing inflation in the country. South Vietnam has the worst inflation of any country in the world today. Prices have risen 42 percent in the first six months of this year alone.
What the government is now trying to do is soak up piasters -- its national currency -- and get them out of circulation. Their reasoning is the less money there is to spend, the less prices will go up.
Lately, Vietnamese have not been depositing their money in banks because inflation outstripped any profits to be made on interest. So, to encourage more people to bank their money, interest rates have been increased to 20 percent.
To cut down on the flow of piasters out of the country, the government has cracked down on the importation of luxury goods such as cars, refrigerators and radios. Only essential goods, backed by American dollars, will be brought in from now on. To do this, the value of the piaster has been put on a sliding scale. Under this scheme a South vietnamese will pay fewer piasters per dollar to import necessities while with luxury goods he will have to pay a lot more.
President Thieu will be standing for re-election next year. If he took all the measures the economists have urged on him he would commit political suicide. As a result he has agreed to only measures aimed at blunting the rise in prices until after the next presidential election. Meanwhile, the economists are waiting to see what effect the new laws will have on the price spiral.