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Citing deficit, Gates moves to cut US defense budget

In Uncategorized on January 8, 2011 at 4:10 am

WASHINGTON (AFP) – Citing “dire” fiscal pressures, Defense Secretary Robert Gates proposed deeper cuts than planned in US military programs, scaling back ground forces for the first time since the 1990s.


Gates, in a compromise with the White House, said the 78 billion dollars in cuts and other measures would result in a slower pace of growth in defense budgets over the next five years, despite earlier plans to keep spending at a higher rate.


The proposed cuts will require reducing the size of the Army and the Marine Corps in 2015-16, with the Army reducing its force by 27,000 troops and the Marines by 15-20,000, he told a news conference.


The US Army and Marines have not faced reductions since the post-Cold War cuts in defense spending in the 1990s, and the size of the ground force — unlike the Air Force and Navy — has expanded since the attacks of September 11, 2001.

AFP file – A US soldier gets a hand to climb a wall during a patrol in Arghandab Valley, Afghanistan.

The decision reflected the shifting political climate in Washington, with the spotlight on the government’s deficit overshadowing a long-running focus on national security after 2001.


The Pentagon chief said he would have preferred to avoid such cuts, “but this country’s dire fiscal situation and the threat it poses to American influence and credibility around the world will only get worse unless the US government gets its finances in order.”


As a major portion of the US budget, “the Pentagon cannot presume to exempt itself from the scrutiny and pressure faced by the rest of our government” to scale back spending, he said.


Some Republican leaders in Congress promptly criticized the proposed budget as a threat to the military’s health, while some budget hawks have argued for much deeper cuts in defense spending.


Gates said the Pentagon needed to steer a middle course without dramatic cuts, but insisted the bureaucracy had to change the way it operated.


“This department simply cannot risk continuing down the same path — where our investment priorities, bureaucratic habits, and lax attitudes towards costs are increasingly divorced from the real threats of today, the growing perils of tomorrow, and the nation’s grim financial outlook,” he said.


Despite talk of fiscal constraints, the vast American defense budget still far exceeds other countries and comes as European allies face drastic cutbacks to core military programs.


Gates had hoped to avoid any cuts that directly affected the fighting force but said the reductions in the Army and Marine Corps will not come until 2015 — when Washington hopes Afghan forces will take over responsibility for their country’s security.


The Army is currently at 569,000 troops, after a temporary increase of an additional 22,000 troops, and the Marine Corps has about 202,000 personnel.


The proposed defense budget for fiscal year 2012 will reach 553 billion dollars, growing at a modest rate of three percent, he said. But future budgets will gradually be scaled back to zero real growth in 2015 and 2016, Gates said.


Gates, mindful of a growing push to rein in the country’s deficit and national debt, has for months signaled plans to find tens of billions in savings in the defense budget with the aim of preserving key military programs.


The department found 150 billion dollars in savings that were meant to be plowed back into the defense budget, but the White House demanded a cut of 78 billion in military spending over the next five years.


The Pentagon used savings in overhead costs of 54 billion dollars to meet the White House request, but Gates still had to find an additional 24 billion.


The additional savings were found by adjusting economic forecasts for budgets in coming years, streamlining plans for the F-35 fighter and cutting the Army and Marine Corps, he said.


Gates confirmed that the cuts included cancelling an amphibious landing craft favored by the US Marine Corps, the Expeditionary Fighting Vehicle, which he said had been plagued by repeated delays and rising costs.


Apart from cancelling the amphibious craft, Gates also proposed changes in the costly F-35 fighter jet program, putting the troubled Marine version of the aircraft on a two-year “probation” to resolve persistent technical problems.


For more cost savings, Gates proposed streamlining the Defense Department’s “sprawling intelligence apparatus,” maintaining a freeze on hiring civilians for three years, eliminating more than 100 general and senior officer positions and scrapping nearly 400 internal reports.

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Source: SGGP

How to control the trade deficit in 2010

In Uncategorized on October 22, 2010 at 3:54 pm




How to control the trade deficit in 2010


QĐND – Friday, October 22, 2010, 22:35 (GMT+7)


The trade deficit is predicted to increase sharply in the remaining months of this year, raising concerns for managers and businesses, and posing challenges to the management of the country’s macro-economy.

Over the past nine months, Vietnam’s trade deficit has risen to US$8.6 billion, accounting for 16.7 percent of total export turnover.


A Radio Voice of Vietnam (VOV) reporter interviewed Dr. Ho Duc Hung, Head of the Economic Development Research Institute at the Ho Chi Minh City University of Economics on the issue.


Reporter: Many economic analysts have predicted that the import surplus is likely to rise by the end of this year. What has caused the rapidly increasing trade deficit in recent months?


Mr Hung: Firstly, the Vietnamese economy is bouncing back from the global economic downturn and businesses’ demands for imports to boost production are rising. Secondly, there are growing needs for commodities for the lunar New Year Festival. Lastly, to fulfill their export targets, businesses have to import raw materials, which has sent the import surplus soaring in the remaining months.


Reporter: The industrial sector has an import surplus of less than US$13.5 billion for 2010. With the increasing trade deficit, is this target achievable?


Mr Hung: The National Assembly’s target is to keep the trade deficit, 20 percent lower than export turnover. However, this target is unlikely to be reached as it is hard to post a high export growth in agricultural and aquatic products and minerals this year.


In addition, the export of crude oil is dropping as oil producers have to provide a relatively high volume of crude oil for the Dung Quat Oil Refinery which has led to lower oil exports.


Garments and textiles are facing tough competition from China, especially in the US market.


Reporter: What should be done to limit the trade deficit and stabilise the macroeconomy?


Mr Hung: In fact, the import surplus is good, if it supports an export surplus. However, it is a question of the structure of imported goods, not measures to control the trade deficit. Therefore, we need to root out the problem by limiting the import of luxury goods, develop supporting industries and stop the import of goods through unofficial trade channels.


Reporter: Do you think the adoption of policies to encourage businesses to build domestic distribution systems for the rural market is a good way of controlling the trade deficit?


Mr Hung: Expanding the domestic market is also a way of competing with imported goods. By doing so, it is essential to develop distribution networks from urban to rural areas to help these products gain a foothold in the domestic market, and encourage Vietnamese to use Vietnamese products and minimise the use of foreign goods.


In addition, it is necessary to create environmental hygiene and safety standards to protect domestic production. If such measures are taken comprehensively, import surplus will fall.


Reporter: Thank you very much.


Coffee prices hit a record high


The price of coffee has risen a record to VND31,500 per kilogram in the past two years.


The price of coffee increased from VND29,000 on October 19 to VND30,000 on October 20 and to VND31,500 per kilogram on October 21.


According to the Vietnam Cacao and Coffee Association (Vicofa), the domestic price of coffee has risen because of a shortage on the world market and international businesses are rushing to purchase coffee. In addition, heavy rains have hit key coffee plantations areas in Vietnam, worrying investors.


Source: VOV


Source: QDND

UK unveils spending cuts to tackle huge deficit

In Uncategorized on October 20, 2010 at 11:04 am

LONDON (AFP) – Britain will unveil billions of pounds in public spending cuts Wednesday in a sweeping review of government expenditure expected to trigger half a million job losses as it tackles a huge deficit.


Prime Minister David Cameron’s Conservative-Liberal Democrat coalition wants to cut spending by 83 billion pounds (130 billion dollars, 95 billion euros) by 2014-15, and the review will reveal exactly where the axe will fall.

A job seeker (R) attends a work-finding workshop in east London. AFP file

In its biggest challenge since taking power in May, the coalition wants to eliminate Britain’s 154.7-billion-pound deficit — a legacy of the previous Labour government and the recession — over the next five years.


Finance minister George Osborne is expected to say his plans, which will see departmental spending reduced by an average of 25 percent, will map out “a hard road to a better Britain,” according to reports.


Osborne is set to brace the public sector for nearly 500,000 jobs to be culled over the next four years — a fact unwittingly revealed by a Cabinet minister who was photographed reading confidential briefing papers.


Danny Alexander, the Liberal Democrat chief secretary to the Treasury, was snapped Tuesday with the documents on his lap as he was driven away from his office.


Britain’s welfare and justice systems are expected to be hard hit, and the BBC is braced for a 16 percent cut to its budget in real terms over the next six years, the broadcaster’s website reported.


The coalition started the process Tuesday, announcing that it would shrink the country’s armed forces and scrap key assets like its flagship aircraft carrier in a defence review that forms part of the wider programme of cuts.


Cameron said 17,000 service personnel would go from the British Army, Royal Air Force and Royal Navy by 2015 — but vowed there would be “no cut whatsoever” to the level of support for forces in Afghanistan.


The harshness of the measures has worried some economists who fear they could plunge Britain’s economy back into recession, a concern shared by the opposition Labour party, which was ousted from power in the May election.


The International Monetary Fund has enthusiastically endorsed Osborne’s plans, and European governments are watching closely.


Trade unions have reacted with anger and thousands of union members and protesters rallied in London Tuesday, waving placards that said “Don’t Break Britain” and “No more cuts”.


Labour’s finance spokesman, Alan Johnson, has also warned that the cuts were being made “too deeply and too quickly”.


The scale of the cuts has provoked disquiet among some Liberal Democrats, the junior coalition partners, who fear they could cause lasting social damage.

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Source: SGGP

Trade deficit at a record low

In Uncategorized on July 15, 2010 at 8:59 am




Trade deficit at a record low


QĐND – Monday, July 12, 2010, 20:53 (GMT+7)

June saw trade deficit to a record low of dropping approximately US$742 million, down 14.7 percent from the previous month, according to the latest customs figures.


The country’s total import-export turnover was estimated at US$13.38 billion (exports worth US$6.32 billion and imports US$7.06 billion). In comparison to May, export earnings increased slightly but imports decreased by 1.7 percent.


In the first six months of this year, the export turnover hit US$32.47 billion, up 17 percent compared to the same period last year, and accounting for 53.2 percent of the yearly plan. In the same period, the import turnover reached US$38.76 billion, up 29.1 percent against last year and making up 52.4 percent of the yearly plan.


As a result, the trade deficit in the first half of 2010 stayed at US$6.29 billion, equal to 19.4 percent of the total export turnover and even lower than the target set by the National Assembly.


Source: VOV


Source: QDND

Portugal plans deeper deficit cut

In Uncategorized on May 10, 2010 at 12:50 pm

LISBON, May 10, 2010 (AFP) – The Portuguese government said Monday it wanted to make a deeper than planned dent in its public deficit next year, reducing the shortfall to 5.1 percent of output rather than 6.6 percent.


“In 2011 we are going to continue our efforts to reduce the deficit by 1.5 points more than what had been planned,” Finance Minister Fernando Teixeira dos Santos told Portuguese journalists in Brussels where he was attending a eurozone finance ministers’ meeting.


Prime Minister Jose Socrates on Friday said the public deficit target for this year had been lowered to 7.3 percent of gross domestic product from 8.3 percent.


To reach that goal, the government has decided to postpone certain investment projects, such as a new airport in Lisbon or a third bridge across the Tagus River.


The deficit last year rose to 9.4 percent, prompting fears in the eurozone that Portugal — like Greece — could have trouble raising money on the bond market.


The country’s public debt burden came to 76.6 percent of output in 2009 and is expected to hit 86 percent in 2010.


The government has not ruled out a tax hike in order to meet its fiscal targets.


Despite its deficit and debt, analysts contend that Portugal will remain solvent.

A man reads the newspapers front pages at a kiosk in downtown Athens, Greece, on May 10, 2010. AFP photo

 

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Source: SGGP

Agencies mull solutions to ease trade deficit

In Uncategorized on May 3, 2010 at 8:30 pm




Agencies mull solutions to ease trade deficit


QĐND – Monday, May 03, 2010, 20:46 (GMT+7)

Trade deficit control has been ineffective as Vietnam’s trade deficit in January-April reached US$4.65 billion, or 23 percent of the export earnings in the period, agencies said. 


Export turnover in April was $5.7 billion, up 1.9 percent from March, while imports hit $6.95 billion, up 3 percent, the General Statistics Office (GSO) reported.


As a result, the trade deficit in April was US$1.25 billion, compared to $1.16 billion in March, $1.33 billion in February, and $945 million in January.


In the first four months of this year, Vietnam’s exports rose 8.9 percent year on year to $20.16 billion, while imports soared 35.6 percent to $24.81 billion.


Major imports in the period were machinery and equipment; petrol and oil; steel and iron; electronics, computers and accessories thereof; and plastic products.


Of the January-April trade gap, the foreign-invested enterprises (FIEs) accounted for $700 million. It spent $10.2 billion on imports, posting an expansion of 55.6 percent, and earned $9 billion from exports, gaining a growth of 44 percent.


To help FIEs boost exports and reduce trade deficit, Prime Minister Nguyen Tan Dung has asked the Ministry of Industry and Trade to work with other ministries to remove unreasonable regulations that has hindered their operation.


Commenting on whether increasing import duty should be a measure to help ease trade deficit, Vu Van Truong, head of the Tax Policy Office under the Finance Ministry, said such a measure is only a short-term one.


This measure needs to be given a due consideration, as it may push production cost up and consequently give rise to an increase in prices of some commodities on the market.


To increase export turnover and reduce trade deficit, the Ministry of Industry and Trade called on businesses to seek new outlets for exports and strengthen their marketing efforts in Asian, EU and North American markets.


Hard to keep trade gap under 20 percent


The country expects to earn about $72 billion worth of exports this year, an increase of 5.6 percent from 2009, and keep trade deficit under 20 percent of export earnings.


However, the ministry said the trade gap target is unlikely to be met, since the country has to import as much as 80 percent of its demand for materials, fuels, machinery, and equipment for production of goods for export.


For instance, the textiles and garment sector earned around $3 billion from exports in the last four months, but it had spent about $2.6 billion on imports of cotton, cloth, and other materials to make products for export, he said.


According to the GSO, trade deficit control has proved ineffective as products subject to import controls, such as seafood, fruits and vegetables, steel, gems and precious metal, increased by 59 percent in the past four months.


Goods subject to import limitation, such as consumer goods, motorbikes, and under-nine seat cars that are fully assembled, also rose 41 percent.


Meanwhile, trade deficit control has been efficient only in reducing imports of luxury consumer goods and machinery and equipment that the country can manufacture, said Nguyen Thanh Bien, Deputy Minister of Industry and Trade.


However, he pointed out that those commodities accounted a modest proportion, about 17 percent, in the total volume of imports in the last four months. Therefore, their influence on reducing trade deficit is inconsiderably.


Source: SGGP


Source: QDND

Agencies mull solutions to ease trade deficit

In Uncategorized on May 3, 2010 at 8:29 am

Trade deficit control has been ineffective as Vietnam’s trade deficit in January-April reached US$4.65 billion, or 23 percent of the export earnings in the period, agencies said. 

Export turnover in April was $5.7 billion, up 1.9 percent from March, while imports hit $6.95 billion, up 3 percent, the General Statistics Office (GSO) reported.

As a result, the trade deficit in April was US$1.25 billion, compared to $1.16 billion in March, $1.33 billion in February, and $945 million in January.

In the first four months of this year, Vietnam’s exports rose 8.9 percent year on year to $20.16 billion, while imports soared 35.6 percent to $24.81 billion.

Workers at 100 percent Japanese-owned Nidec Tosok (Vietnam) Co., Ltd in Tan Thuan Export Processing Zone, Ho Chi Minh City (Photo: SGGP)

Major imports in the period were machinery and equipment; petrol and oil; steel and iron; electronics, computers and accessories thereof; and plastic products.

Of the January-April trade gap, the foreign-invested enterprises (FIEs) accounted for $700 million. It spent $10.2 billion on imports, posting an expansion of 55.6 percent, and earned $9 billion from exports, gaining a growth of 44 percent.

To help FIEs boost exports and reduce trade deficit, Prime Minister Nguyen Tan Dung has asked the Ministry of Industry and Trade to work with other ministries to remove unreasonable regulations that has hindered their operation.

Commenting on whether increasing import duty should be a measure to help ease trade deficit, Vu Van Truong, head of the Tax Policy Office under the Finance Ministry, said such a measure is only a short-term one.

This measure needs to be given a due consideration, as it may push production cost up and consequently give rise to an increase in prices of some commodities on the market.

To increase export turnover and reduce trade deficit, the Ministry of Industry and Trade called on businesses to seek new outlets for exports and strengthen their marketing efforts in Asian, EU and North American markets.

Hard to keep trade gap under 20 percent

The country expects to earn about $72 billion worth of exports this year, an increase of 5.6 percent from 2009, and keep trade deficit under 20 percent of export earnings.

However, the ministry said the trade gap target is unlikely to be met, since the country has to import as much as 80 percent of its demand for materials, fuels, machinery, and equipment for production of goods for export.

For instance, the textiles and garment sector earned around $3 billion from exports in the last four months, but it had spent about $2.6 billion on imports of cotton, cloth, and other materials to make products for export, he said.

According to the GSO, trade deficit control has proved ineffective as products subject to import controls, such as seafood, fruits and vegetables, steel, gems and precious metal, increased by 59 percent in the past four months.

Goods subject to import limitation, such as consumer goods, motorbikes, and under-nine seat cars that are fully assembled, also rose 41 percent.

Meanwhile, trade deficit control has been efficient only in reducing imports of luxury consumer goods and machinery and equipment that the country can manufacture, said Nguyen Thanh Bien, Deputy Minister of Industry and Trade.

However, he pointed out that those commodities accounted a modest proportion, about 17 percent, in the total volume of imports in the last four months. Therefore, their influence on reducing trade deficit is inconsiderably.

Source: SGGP

China says trade deficit proves yuan not to blame

In Uncategorized on April 10, 2010 at 1:47 pm

China said Saturday its first trade deficit in six years proved the nation’s exchange rate did not play a decisive role in global economic imbalances amid pressure to allow the yuan to appreciate.


International critics say Beijing has kept the currency artificially low to boost exports, resulting in massive trade surpluses with the United States and Europe. The issue has become a major sore point in Sino-US relations.


But China has defended its exchange rate policy as necessary for the survival of Chinese manufacturers and to support jobs growth.


Customs authorities announced on Saturday that the nation had posted its first trade deficit in six years in March, at 7.2 billion dollars.


Exports rose 24.3 percent to 112.1 billion dollars from the same month a year earlier, while imports soared 66 percent year-on-year to 119.3 billion dollars, they said.


Commerce minister Chen Deming had warned last month that the deficit was likely, but said it would only be a short-lived phenomenon for the nation’s export-dependent economy.


And on Saturday the ministry, which is reluctant to allow a stronger yuan, was swift to respond to the figures.


“Under the situation where the yuan exchange rate was maintained basically stable, China’s trade surplus continued to shrink, with a deficit occurring in March,” Yao Jian, spokesman for the ministry, said in a statement.


“This again shows that in an era of economic globalisation, the deciding factor for balanced trade is not the exchange rate, but other factors such as the relationship of supply and demand in the market.”


Mark Williams, London-based senior China economist at Capital Economics, said the nation’s deficit “might win it some respite from pressure to do more over its exchange rate.”


“But the calm won’t last. China’s trade surplus will soon reappear. Indeed, the surplus that matters most politically — that with the US — is already rising again and not far off a record high,” he added.


Ken Peng, a Beijing-based economist for Citigroup, agreed. “It could alleviate some of the external pressure, but this is a temporary trade deficit and the yuan is not the only reason for global imbalances,” he said.


Brian Jackson, senior strategist at Royal Bank of Canada, said China could still let its currency appreciate for domestic reasons, and “not to placate international pressure.”


“They will want to move because it’s in their own domestic interest to do so, in terms of dealing with inflationary pressures,” he said.


Jackson added the deficit was partly the result of seasonal factors, as Chinese exports tend to pull back at the beginning of the year after having surged in the previous quarter ahead of the US holiday season.


“There has also been an adjustment in the yearly trade balance,” he said.


“If you do a 12-month rolling sum of the trade balance, that shot up to very extreme levels from 2006 to 2008, and it started to come back down.”


The financial crisis took its toll on China’s exports, forcing the world’s third largest economy to start adjusting its focus onto domestic demand.


Beijing has tried to play down expectations for a strong pick-up in exports this year, with commerce minister Chen saying last month that it could take up to three years to return to pre-financial crisis levels.


And China’s growth has rebounded much faster than the rest of the world, which has led its imports to grow faster than its exports.


The Asian nation returned to double digit growth in the last quarter of 2009, and expanded by a total of 8.7 percent for the whole year on massive public spending and rampant bank lending.

Source: SGGP

Trade deficit to be kept at stable level

In Uncategorized on March 26, 2010 at 7:24 am




Trade deficit to be kept at stable level


QĐND – Thursday, March 25, 2010, 21:12 (GMT+7)

The government’s decisions to raise the prices of several commodities in March, and the minimum salary for employees, starting on May 1, will not make the State budget deficit increase, Finance Minister Vu Van Ninh has confirmed.


In an interview granted to Tin Tuc (News Bulletin) newspaper on March 25, Mr Ninh said the government has mobilised sufficient resources to carry out the salary reform scheme this year, under which the minimum salary for employees will increase to VND730,000 from the current VND650,000. It has also allocated budget for ministries, sectors and localities to meet the targets for socio-economic development this year.


Minister Ninh said his ministry will cooperate closely with relevant ministries and localities to iron out snags for businesses by further improving the investment environment and abolishing improper fees. He called on businesses to update technology and use fuel economically so as not to incur losses as a result of price hikes on input materials.


He confirmed that there will be no price adjustments for electricity and coal until the end of this year. He said since early March the Ministry of Finance and relevant agencies have examined the prices of cement, fertilizer, building materials, liquefied gas, sugar and fodder which are among essential commodities vulnerable to any market fluctuations. The ministry has also sent telegrams to provinces and cities, requesting that they establish inspection teams to keep market prices in check.


The ministry has proposed that the Prime Minister instruct State economic groups and corporations to stockpile and provide a sufficient supply of commodities for production and domestic use aimed at reining in possible runaway inflation, and to take part in poverty reduction projects.


The ministry has also asked petrol businesses to extend the timing between price adjustments from now until June if the global market fluctuates, in order to soften the psychological impact.


To achieve steady economic growth and curb runaway inflation, the Ministry of Finance has made recommendations to the government to take a host of measures. Accordingly, the government will continue to apply State-managed market price mechanisms despite global fluctuations, control monopolies and encourage price competition. It will closely monitor the registration and listing of prices of commodities and services designated for national target programmes.


The government will apply a flexible financial policy under strict scrutiny, strengthen the management of tax collection, and extend the deadline for corporate income tax for small- and medium-sized enterprises, mostly garment and footwear makers.


It will manage the foreign currency market flexibly in relation to the interest rates, the price consumer index and trade balance to increase exports and reduce imports. It will also effectively cope with any fluctuations in capital flows, stabilise the overall payment balance and keep the foreign currency reserves within safety limits. 


The National Assembly has approved a resolution to keep the inflation rate at less than 7 percent and the budget deficit at 6.2 percent of GDP in 2010.

Source: VOV

Source: QDND

US reports December budget deficit at 91.85 billion dollars

In World on January 15, 2010 at 9:18 am

The US government budget deficit hit 91.854 billion dollars in December, sharply higher from the same month a year earlier, Treasury figures showed Wednesday.


The budget shortfall for last month compared with 51.754 billion dollars in December 2008, the figures showed. But it was less than 120.289 billion a month earlier.


In the first three months of the US fiscal year, the accumulated deficit is 388.5 billion dollars, up from 332.5 billion in the same period a year earlier.


The White House is forecasting a deficit for the full fiscal year of some 1.5 trillion dollars, which would eclipse the record of 1.416 trillion in the fiscal year ended September 30.


 


Source: SGGP Bookmark & Share