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Saturday, July 13, 2024

VND800-trillion relief package proposed for economic recovery

The Saigon Times

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HCMC – The Ministry of Planning and Investment has proposed a post-pandemic economic recovery and development program costing some VND800 trillion, 3.5 times higher than the Government’s package in 2021.

According to the ministry, the pandemic has affected most countries worldwide. Many countries, such as the United States, Japan, Thailand, Malaysia and China, launched large relief packages, Thanh Nien newspaper reported.

Although the Government has mobilized resources to help residents and enterprises overcome the difficulties caused by the pandemic, the scale of support policies remains modest, at some US$10.5 billion, or 2.85% of the country’s gross domestic product, in 2021.

Without prompt significant support policies, the economy cannot recover and develop, affecting State budget revenue and the financial, monetary, labor and job markets. In addition, the country may miss opportunities in production, business, investment and trade, and lag behind other economies.

Therefore, a post-Covid economic recovery and development program is needed. The program is expected to be executed in the 2022-2023 period with four components: the economic reopening in association with the pandemic fight, social welfare and employment, the resumption of enterprises, cooperatives and household businesses, and infrastructure development.

The VND800 trillion needed for the program is expected to be sourced from regular expenditure savings, Government bond sales, foreign reserves or loans from the World Bank, the International Monetary Fund and the Asian Development Bank.

According to the Ministry of Planning and Investment, while executing the program, the country’s economic growth in 2021-2025 is projected at 6.4%-6.8% per year. The mobilization of resources for the program may increase public debt, but it will remain under control.

Dr. Vo Tri Thanh, president of the Institute for Brand and Competitiveness Strategy, said the program would support workers and enterprises to overcome their current difficulties and help enhance institutional reforms for further development.

If the program is executed, the State budget deficit may be higher, but the macroeconomy will be stable in the medium term.

Dr. Tran Du Lich, an economic expert, said the program should be implemented to help the economy recover, improve the role of domestic firms and make the most of the free trade agreements which Vietnam has signed.

The current situation required stronger resources to support pandemic-hit residents and enterprises. Therefore, the Government must accept that the State budget overspending in 2022 and 2023 will be higher than the 4% approved for this year.

The Government should also continue improving the investment environment and reforming administrative procedures to attract private investors.

Both Thanh and Lich agreed that the program must be deployed quickly. Lich said if support policies are not issued quickly, enterprises that have been heavily hit by the pandemic may pull out of the market. Therefore, the Government should submit the program to the National Assembly for approval early next year.

Thanh said that relief packages should be deployed quickly with constant monitoring to prevent losses. The Government should enhance administrative reforms, build an e-Government, focus on restructuring enterprises and training workers, and issue policies to encourage the development of fintech and artificial intelligence.

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