Fiscal policy affirms the pivotal role of the economy

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Fiscal policy has supported people and businesses to overcome difficulties caused by the pandemic. Photo: T.D

Minister of Finance Ho Duc Phuc said that 2022 is a successful year of socio-economic development and management. Accordingly, GDP growth is expected to increase from 7.5-8%; CPI index is currently increasing by 2.73% and public debt/GDP is estimated at 43%, lower than the ceiling of less than 60% GDP allowed by the National Assembly.

Regarding import and export, there is now an export surplus of over 8 billion USD. Along with that, the budget deficit is 3.74%, below 4% compared to the Resolution of the National Assembly, if including the economic recovery package, the overspending is at 4.5%.

Minister Ho Duc Phuc affirmed that in 2022, fiscal policy has been the mainstay of the economy. In which, budget revenue is expected to reach VND1.614 quadrillion, exceeding about VND202.4 trillion, up 14.3% compared to the estimate and up 2.9% compared to the 2021 plan. In particular, internal revenue still achieved a growth rate of 9.8%. According to the Minister, 2022 is the year of the largest tax reduction, the highest in the history of the taxation sector when it has reduced about VND233 trillion; in the first 9 months of 2022, tax exemption, reduction and extension has been implemented with more than VND151 billion.

According to Minister Ho Duc Phuc, in 2022, to support the recovery of the economy, the Ministry of Finance has coordinated with ministries and branches to advise the Government and the Prime Minister to submit to the National Assembly for promulgation of a recovery support package and socio-economic development up to 347 trillion VND. In which, there is VND131 trillion invested in infrastructure; VND14 trillion invested in health; VND38 trillion for preferential capital for the Bank for Social Policies to implement credit programs; VND40 trillion with 2% interest rate support; VND6,600 billion to support rent for workers.

The Ministry of Finance has also implemented fiscal policies that focus on supporting people and businesses. Minister Ho Duc Phuc said that in 2022 alone, the Ministry of Finance has advised the competent authorities to extend and reduce many taxes, fees and land rents for people and businesses; reduce up to 37 fees and charges; reducing environmental protection tax on petroleum contributes to alleviating difficulties for people and businesses. The Ministry of Finance has also advised the Government to establish a Vaccine Fund for Covid-19 Prevention and Control, which has so far mobilized nearly VND11 trillion, the current balance is more than VND3 trillion. Along with resources from the budget, up to now, injections have been made free of charge to the entire population.

Also according to Minister Ho Duc Phuc, recently, in the context of high world gasoline prices, the Ministry of Finance has proactively submitted to competent authorities to reduce the environmental protection tax on gasoline to the floor level, reduce import tax incentives down to 10% to reduce gasoline prices, support people and businesses.

Fiscal policies have contributed to mobilizing resources, investing in infrastructure, and creating runways for development. The extension, reduction and extension of many taxes, fees and charges have helped businesses have revolving capital, overcome difficulties to promote production and business.

According to experts, fiscal policy has been operated in the direction of proactive, reasonable expansion, supporting socio-economic recovery and development; strengthen financial discipline; stabilize Vietnam's economy, ensure great balances of the economy, make an important contribution to the implementation of socio-economic development tasks in 2022 and ensure social security and people's lives.

Newly updated data from the Ministry of Finance shows that, in the first 10 months of the year, the central budget spent from provisions (including contingencies in 2021) of VND4,893.2 billion to supplement expenses of Covid-19 prevention for the Ministry of National Defense (729.8 billion VND) and support for localities (3,489.5 billion VND) in funding for prevention and control and to support people facing difficulties due to the Covid-19 pandemic. To support plant varieties, livestock and aquatic products to restore production in areas damaged by natural disasters and epidemics. Along with that, temporarily grant an additional 4,149 billion VND to 22 localities to implement the policy of supporting rent for employees according to Decision No. 08/2022/QD-TTg dated March 28, 2022 of the Prime Minister.

Assessing the impact of fiscal policy on supporting businesses to overcome difficulties in the context of the Covid-19 pandemic, the economic expert Vo Tri Thanh said that it can be viewed from two angles.

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From a direct perspective, through the survey results, fiscal policy is meaningful in supporting objects and businesses to recover and develop production and business. Basically, fiscal policy affects both the supply side and the demand side. In particular, the support packages, economic recovery and development programs have quickly come to life. From an indirect perspective, fiscal policy together with monetary policy contributes to maintaining macroeconomic stability. This is a very important premise to create more trust in the market and investors, as well as "promote" businesses to boost production and business activities.