HANOI, Nov 07, 2009 (Xinhua via COMTEX News Network) --

Vietnam is manifesting some signs for change in its economic policy in view of the pickup of the world economy and increasing fiscal deficit.

At a recent monthly government meeting, Vietnam has decided to extend the subsidized loan program, a highlight of the existing stimulus, but with a lower interest rate subsidy and primarily for export-oriented companies.

Officials also decided to end the tax reduction scheme after it expires on Dec. 31. It did not reveal any more large government- invested projects in the coming months.

The meeting sent out the message that the Vietnamese government wants a change in its economic policy with growing pressure from fiscal deficit. The focus of the government is shifting from stimulating economy through government spending during the economic downturn to reviving the country's export-driven industry as the global situation turns better.

Vietnam's economy grew 4.6 percent year-on-year in the first nine months, thanks to the eight-billion-U.S.-dollar stimulus package. The growth was remarkable when some other regional economies are contracting or recovering slowly.

But accompanying the remarkable result is the government's increasing fiscal deficit. Revenues fell in line with the slowdown in economic activity, lower oil prices and various tax breaks. Meanwhile, spending went up substantially because of stimulus expenditure measures and government commitments to social welfare.

According to figures released by the World Bank this week, the fiscal deficit of Vietnam is expected to widen to 9.4 percent of GDP in 2009, which raised concerns.

At this point, proper economic policy for next year is crucial to Vietnam's recently emerging but fragile recovery. It remains challenging to strike a balance between growth and stability.

Taking a look at changes in the domestic and international market will help people better understand the situation in Vietnam and Vietnamese government's position.

Following the outbreak of the world financial crisis, Vietnam saw its export, which usually contributes to 70 percent of the national GDP, collapse. The country has to resort to investment and consumption measures to sustain economic growth.

Thanks to pushing forward economic reforms and international integration in the past 20-plus years, Vietnam has accumulated wealth and expertise to cope with the challenges.

The Vietnamese government quickly launched an eight-billion-U.S. -dollar fiscal package. The program financed large investment project from state budget, provided interest subsidy to company loans, reduce taxes and support low-income families.

As a result, although exports fell by 14.4 percent in the first three quarters over a year earlier, Vietnam's GDP registered a 4. 6 percent year-on-year growth during this period.

A World Bank report earlier this week said Vietnam has " navigated the crisis relatively well."

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