Fiscal policy is expanded and flexible to promote economic growth 2024

Fiscal measures to support growth and public investment are key policy solutions to stimulate growth in 2024. Photo: ST

Solid pedestal

According to Mr. Truong Ba Tuan, Deputy Director of the Department of Tax Policies, Fees and Charges policy supervision Authority (Ministry of Finance), in the context of many difficulties in the economy, Ministry of Finance has coordinated with ministries and localities to advise the Government and submit to the National Assembly Standing Committee to promulgate many solutions to support people and businesses, including solutions to exempt, reduce, and extend tax payment deadlines on a large scale.

In 2024, based on consideration and assessment of the economic situation, along with related factors, the Ministry of Finance has advised to continue reducing environmental protection taxes on gasoline and oil; promulgate a policy to reduce value added tax (VAT) by 2% for some goods and services as applied in 2023; continue to reduce some types of fees, charges and land rent... to support people and businesses. These policies have been agreed and highly appreciated by businesses and people.

Also according to Mr. Truong Ba Tuan, in the future, to remove difficulties for businesses and people and promote economic growth, the Ministry of Finance will continue to closely monitor developments in the socio-economic situation; and research and propose policy solutions on revenue collection, thereby providing appropriate tax policy solutions.

Affirming that in recent times, the Ministry of Finance has managed fiscal policy flexibly and effectively, serving as a foundation for the economy, Deputy Minister of Finance Nguyen Duc Chi emphasized that the growth of the economy in recent times also came from the close and flexible coordination of fiscal policy with monetary policy. Fiscal policy and monetary policy have a close and inseparable organic relationship. The Government has used unprecedented fiscal and monetary policies to support people and businesses while supporting growth, controlling inflation, and stabilizing the macroeconomy.

“According to the assessment of the Fiscal and Monetary Policy Advisory Council, over the past 4-5 years, the coordination between fiscal and monetary policies has been improved one step and achieved effectiveness. In the recent period, there have been major, difficult-to-predict socio-economic changes. We have used and operated fiscal policy in coordination with monetary policy in a flexible to support economic growth, ensure social security stability, national security and defense and ensure economic growth. Thanks to fiscal policy as a strong foundation, we have overcome difficulties and achieved impressive growth in the context of many difficulties in the world economy," Deputy Minister Nguyen Duc Chi emphasized.

A key solution to recovering growth

In 2024, many experts believed that fiscal policy would continue to be the driving force and key factor for economic growth.

According to Asian Development Bank (ADB) experts, in the context of limited monetary policy space, fiscal spending and investment will be the key to growth in 2024. Mr. Shantanu Chakraborty, National Director ADB expert in Vietnam believed that the favorable fiscal position, negligible budget deficit and low public debt-to-GDP ratio provide enough fiscal space to support growth. According to ADB experts, the VAT reduction program will be implemented until June 2024 and may be extended until the end of 2024. Along with that, a large amount of public investment capital which is equivalent to US$27.3 billion, has been Plan to disburse this year. Together with the capital disbursed in 2023, this additional public investment will boost growth significantly.

“Pro-growth fiscal measures and public investment will eventually become key policy measures to stimulate growth. In 2024, public investment will continue to play an important role in supporting the economy. After the National Assembly approved the budget, the Prime Minister approved a plan to allocate VND 688.5 trillion to continue building infrastructure and promote economic development. The government has implemented various policy measures to accelerate the disbursement of public investment and improve implementation efficiency. By proactively overcoming obstacles in a comprehensive manner throughout the project cycle, Vietnam can maximize the potential of public investment initiatives, promoting economic growth and sustainable development.”, ADB expert emphasized.

Also emphasizing that public investment still needs attention and is an important driving force to promote growth in the context of slow recovery of global and domestic aggregate demand, economist Nguyen Bich Lam, former Director General of General Statistics Office of Vietnam, the Ministry of Planning and Investment believed that it was necessary to quickly allocate detailed state budget capital investment plans for 2024 complying with regulations, avoiding delay; the detailed allocation of capital plans must ensure key points, not spread out, be consistent with implementation ability, and comply with legal regulations on public investment.

Expert Nguyen Bich Lam also proposed that the Government needed to consider continuing to implement fiscal policies to support people and businesses such as extending or postponing the payment deadline for some taxes and fees for businesses; continuing to remove barriers in the legal environment, creating an open production and business environment, and create trust for the business sector.