Vietnam to pursue flexible, prudent monetary policy as pressures rise - PM

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Next year to bring big economic challenges - PM

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Dong currency his record low for 11th session

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Recovery needs coordinated monetary, fiscal policy - World Bank

HANOI, Oct 20 (Reuters) - Inflation pressure is rising in Vietnam from uncertainty over energy prices and the war in Ukraine, but authorities will keep prices in check and pursue flexible, prudent monetary policy throughout next year, its prime minister said on Thursday.

The government will maintain macroeconomic stability this year and manage inflation, while keeping it under 4.5% next year and targeting 6.5% gross domestic product growth, Pham Minh Chinh told legislators on Thursday.

He said 2023 would bring more challenges than advantages for Vietnam's economy and local markets would face risks.

"We will continue to pursue a prudent and flexible monetary policy to ensure macro-economic stability in 2023," he told the National Assembly in the opening of its new session.

"The tasks for us for the rest of this year and for 2023 are challenging," Chinh said, warning of rising input costs for businesses and dwindling global demand.

"Diseases and climate change impacts, including droughts, floods and storms, could add to the challenges," Chinh said.

Regional manufacturing hub Vietnam has seen its economy rebound strongly from the pandemic, with gross domestic product in the third quarter growing 13.67% from a year earlier. This year's growth is seen at 8%.

But like most of its regional neighbours it has seen challenges with inflation and depreciation of its dong currency , which hit a fresh record low against the dollar on Thursday for an eleventh consecutive session.

The dong has lost 7% this year.

The central bank on Monday widened its exchange rate trading band to 5.0% from 3.0% in a move to allow the dong to devalue.

Last month, the central bank raised its policy rates by 100 basis points, in a rare monetary tightening move aimed at keeping inflation under 4% this year.

"Given the economy has not fully recovered and growth in main export markets is expected to slow, continued active fiscal policy to support the economy should be closely aligned with economic outcomes and coordinated with monetary policy," the World Bank said in a report on Thursday. (Reporting by Khanh Vu; Additional reporting by Phuong Nguyen; Editing by Martin Petty)