Maintain fiscal policy to "open the way" for the economy in 2024

VCN - According to Dr. Can Van Luc, member of the National Financial and Monetary Policy Advisory Council (as picture), to maintain high and sustainable growth momentum in the next 1-2 years, the Government still needs to continue to prioritize fiscal policy tools with the support of monetary policy to promote domestic aggregate demand. In particular, to further accelerate economic recovery, it is necessary to apply support policies similar to the Covid-19 epidemic and "stimulate" consumption and private investment.
Fiscal policy maintains and ensures national financial security Fiscal policy maintains and ensures national financial security
Fiscal policy - A pivotal milestone in promoting economic recovery and growth Fiscal policy - A pivotal milestone in promoting economic recovery and growth
Good management of public debt creates room to implement expansionary fiscal policy Good management of public debt creates room to implement expansionary fiscal policy
Maintain fiscal policy to

How do you comment on Vietnam's economic picture in 2024?

Contrary to the world trend, this year's inflation is forecast to be higher than in 2023 (3.25%) at 3.4-3.8% because this year Vietnam's economy recovers better, more money supply is released, faster cash turnover, base salary increases from July 1, not to mention tuition, hospital fees, and electricity bills have also increased. The macroeconomic foundation and risk management have been accumulated better, although inflation is increasing, it is acceptable and lower than many countries and regions. Therefore, Vietnam's inflation in 2024 will increase higher, but still below the target (4-4.5%).

Public debt, foreign debt, budget deficit, debt repayment obligations compared to state budget revenue are within the threshold allowed by the National Assembly, fiscal risks are at an average level. Therefore, Vietnam still has fiscal policy space to launch new support packages, but it needs to have key points. Therefore, we recommend implementing support packages like during the Covid-19 epidemic. Along with that, the process of restructuring the economy (especially state-owned enterprises and weak credit institutions) and perfecting institutions is promoted, including guiding the implementation of the Land Law and the Housing Law, Real Estate Business Law, Amended Law on Credit Institutions, etc. In addition, basic local planning has been issued, with specific mechanisms for Ho Chi Minh City, Hanoi, Da Nang, Hai Phong, Can Tho... are actively deployed as important supports as well as increasing regional spread and connectivity.

In addition, Vietnam will continue to take advantage of opportunities from new dynamics coming from the digital economy, green economy, circular economy, and energy transition; International integration is promoted through upgrading strategic partnerships with the US, Japan, Australia, contributing to promoting trade, investment, tourism and many other fields, etc.

To achieve the growth target set for 2024, many opinions say that it is necessary to expand fiscal policy, deploy more business support packages as well as stimulate consumer demand, etc. What is your assessment about this opinion?

I think it is necessary to take fiscal policy as the main force, "expand and focus", including considering continuing to reduce VAT until the end of 2024, allowing registration fees to be reduced for domestically manufactured cars because reducing car registration fees can stimulate demand very well. Even though budget revenue is reduced, on the contrary, selling cars brings in VAT and other fees, which is even higher than the reduction. Along with that, promoting and making consumer credit healthy is also a solution to stimulate demand.

At the same time, taking monetary policy as a "complementary" policy group for fiscal policies, operating proactively and flexibly, allowing debt restructuring (allowing extension until the end of 2024). Improve the effectiveness of coordination between policies (especially between monetary policy, fiscal policy and other macro policies) to promote growth, macroeconomic stability, exchange rate stability and the finance – currency market stability, ensuring social security.

In addition, do not forget new growth drivers (such as digital economy, green growth, regional integration, economic institutional reform, labor productivity, increasing TFP contribution to growth). If these 7 new growth drivers are promoted and exploited well, GDP can increase by 0.9 - 1.4% in the context of global decline as well as in the long term.

Thank you Sir!

By Xuan Thao/ Phuong Linh

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