ABSTRACT
This chapter presents Vietnam's 1989 counter-inflation policies and their results. It discusses Vietnam's counter-inflation measures and analyses how and why the policies worked. Indirect counter-inflationary measure was the liberalization of prices for most goods. The International Monetary Fund, World Bank and the United Nations Development Programme, as well as East European and western economists and observers have all praised Vietnam's 1989 counter-inflation policies. The liberalization of prices has restored a basic supply-demand relationship in Vietnam's economy: price is now the most important signal to the market. A scarcity of goods on the market suddenly turned into a surplus amounting to millions of tons of food, tens of thousands of tons of paper, hundreds of thousands of bicycles. The liberalization of prices has restored a basic supply-demand relationship in Vietnam's economy. Many enterprises illegally imported highly-demanded goods, which only pushed up the price of these goods, the United States dollar, and gold.
