Firmly consolidate growth drivers to boost stable economic recovery

Dr. Nguyen Dinh Cung, former director of the Central Institute for Economic Management.

In the current context, GDP growth for the whole year may be only 3%, less than half of the planned target.

As a result, this is the second year in a row that the set targets for growth, employment and development reform tasks have not been achieved. In developed countries, GDP growth rate decreases, even under zero, but income per person does not decrease, disposable income increases because they cannot spend during the pandemic, so when the pandemic ends, demand explodes, and this is the fundamental factor driving a fast and high recovery.

In contrast, both sides of supply and demand in Vietnam are so weak with millions of unemployed and redundant workforce, lost income, some service industries have been paralyzed in two years. The pandemic has not only caused material loss, but also spiritual loss, production capacity, service provision. Economic structure, labor, resource distribution are being reversed, capacity and resources have been seriously destroyed and eroded. The main growth drivers, excluding exports, have weakened considerably.

However, there are still many bright spots for economic development. In particular, the pandemic is gradually being controlled, production, business and services are gradually reopening. The macroeconomy maintains stability. Major balances of the economy are basically maintained. When the economy bounces back, production, business, investment and consumption will rebound after 5 months of being suppressed. Accordingly, economic growth will recover. It is strongly believed that in the fourth quarter of 2021, the economy will recover.

How do you evaluate the economic recovery and development program for the 2022-2023 period as well as the policy space for economic recovery in the future?

As I said above, the pandemic has severely damaged the economy, but for sudden changes, real breakthroughs with the recovery program and development acceleration, the achieved results at this stage, it will probably be much worse than in the 2016-2020 period, growth will be far below the set target.

However, compared with the 1999-2011 period, our policy space is quite large and much better. Accordingly, we are controlling a low and stable inflation rate. The financial system is still risky, but it is stronger and better than before. Budget deficit and public debt are still within the allowable threshold. The foreign balance is much more stable, foreign currency reserves are over US$100 billion.

Subjectively, I think we can loosen the public debt ceiling and increase overspending to implement strong solutions for economic recovery.

What do you notice about the groups of solutions proposed in the Economic Recovery Program?

Regarding the groups of solutions for economic recovery, some issues should be noted. Firstly, it is necessary to deal with essential demands like organizing production, social life and safe state management, and flexible adaption to the pandemic. Livelihood and life are two sides of the same coin, inseparable, complementing and reinforcing each other. At the same time, solutions to quickly recover and firmly consolidate the growth drivers of the economy, resources must be used for the right purposes, to the right objects and effectively.

The solution needs to be specific, feasible and can be implemented quickly within the specified time limit. The recovery plan should be more specific. In which, some targets must be higher than those set out in the Five-Year Plan 2021-2025, in order to achieve the goals of the entire term.

The solutions of this rehabilitation program in my opinion should not overlap with existing policies, plans and programs, but should be stronger, higher than existing solutions and focus on four groups: Consolidate managing capacity, improve the effectiveness of disease safety control to reopen the economy; Support enterprises, cooperatives and business households to overcome the pandemic; Stimulate investment and consumption demand; Support social security and re-train workers.

Currently, the Draft offers too many solutions, namely 78 solutions divided into eight groups, but it is not specific and feasible, not focusing on a program with a term of 2-3 years.

Regarding economic development, what do you think about the economic restructuring plan for the 2021-2025 period that has been developed and is being built, including restructuring public investment?

The draft plan sets out such many ambitious targets as an increase in labor productivity of over 6.5% or 1.5 million enterprises in operation by 2025. Meanwhile, as a matter of fact, we are managing to obtain more 700,000 newly registered enterprises, and in order to put these 700,000 enterprises into operation is even more difficult.

The draft also set unrealistic targets such as keeping the public debt ceiling, controlling the budget deficit at 3.7% of GDP. In reality, in order to restore growth and achieve a high growth rate and other goals, public spending, especially public investment in 2021-2025 must be opened and increased, that is, the public debt ceiling should be increased and the public debt ceiling lifted.

Collectively, we set ambitious goals but lack concrete and powerful solutions. I think that it is necessary to have new thinking, a new way of doing things with strong and specific solutions for this restructuring plan to be successful.

Given public investment restructuring, three things must be taken into consideration. First of all, it is necessary to define clear, specific and reasonable criteria for socio-economic efficiency; these criteria are used uniformly for investment selection and decision, in monitoring and evaluation the efficiency of investment projects.

Along with that, priority investment sectors and sectors are identified in each medium-term public investment plan. Finally, sectors and localities have the right to take the initiative in investment preparation (separate from the investment process), actively research, evaluate and select, set aside a project inventory with maximum efficiency, from which, in turn, can select the best according to the ability of capital to invest.

Thank you Sir!