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CONFIDENTIAL
9. The target of a stable population of 1.2bn by the year 2000 is looking increasingly unrealistic. The 1986 birth rate was 20.77 per thousand and the death rate 6.69 per thousand, giving a population increase of nearly 15 million.
PROBLEMS
10. The internal problem which worries the Government most is
inflation. The inflation of 1985 and 1986 was due to large
increases in wages and bonuses, validated by a large increase in
money supply. Despite declared policy, wages and bonuses have continued to increase in 1987 (by 16% in January and February over
the same period last year). rice reform has been postponed in
order to head off price rises. Total or partial decontrol of many prices has had an inflationary effect as most were set at below
market-clearing levels.
11.
The efficiency and profitability of industry both continue to decline and the number of loss-making enterprises is mounting. There is considerable resistance at factory level to the
introduction of wage and bonus differentials.
12.
The proper degree of economic decentralisation is an unresolved problem. The decentralisation of powers to lower, particularly provincial, levels has not increased the ability of
enterprise managers to manage, hindering the development of
enterprises as units responsible for their own profit or loss.
number of powers (in particular, control over wages and investment)
have been recentralised.
13.
The trade and current accounts have begun to look a good deal healthier. The deficit on trade account during the first quarter of
1987 was only US $1bn. There was probably a surplus on the current
account.
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/OUTLOOK
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