Support aggregate demand to promote economic growth

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Fiscal policies to boost aggregate demand have been implemented to stimulate consumption in the economy. Photo: H.Anh

Driving force for economic growth

In recent times, the world situation has been unstable, creating many difficulties and challenges for the sustainable growth of the global economy. Domestically, the economy has faced many challenges, consumer demand has recovered slowly; production and business in some industries and sectors are still facing difficulties; inflationary pressure has increased due to fluctuations in exchange rates, adjustments in electricity prices, wages, etc. Promoting the role of financial policy, the Government and the National Assembly have proactively and flexibly adjusted policies to support the economy, remove difficulties for businesses and people, and promote aggregate demand to restore and develop the socio-economy.

A series of financial policies have been implemented, including: tax exemptions, fees, charges, interest rate reductions, flexible exchange rate management, credit promotion, public investment promotion, etc. In which, fiscal policy plays an important role as a fulcrum of aggregate demand; it becomes the driving force for economic growth in general.

Speaking at the Financial Forum "Financial policies to promote aggregate demand and develop the economy" recently organized by the Ministry of Finance, Mr. Dang Ngoc Minh, Deputy Director General of the General Department of Taxation, cited statistics showing that from 2020 to present, on average, tax support solutions account for about 10-15% of total state budget revenue each year. This is a fairly large proportion and reflects the effectiveness of fiscal policies in maintaining economic activities. These tax support policies have directly impacted the financial resources of enterprises, stimulated consumption, contributed to maintaining production and business and promoting consumption, thereby creating momentum for economic recovery and development. Support from fiscal policies has brought positive results to budget revenue in recent years, with each year being higher than the previous year.

In addition to tax and fee policies, in the recent period, with the role of the driving force of the economy, public investment resources have also been promoted; development investment expenditure from the state budget has increased over the years. The disbursement rate of public investment has improved, with the average for the period 2021 - 2023 reaching 93.8% of the plan assigned by the Prime Minister.

Mr. Duong Ba Duc, Director of the Investment Department (Ministry of Finance) said that in 2024, public investment will continue to play a role in promoting socio-economic development, in which most of the capital will be focused on important national projects such as: expressways, regional connectivity, coastal roads, national target programs... to create space for development. In particular, the state budget in 2024 has allocated about VND 101 trillion for 9 important national projects in the transport sector.

Implement a reasonable expansionary fiscal policy in the short term

In addition to the achieved results, in 2025 and the coming years, the world economic situation is forecast to be both difficult and favorable. Although Vietnam's economic growth in 2024 - 2025 is forecasted by many international organizations to recover strongly, in order to maintain growth momentum and ensure sustainable development, Vietnam needs to overcome challenges such as declining aggregate demand, improve growth quality and respond to uncertain factors.

In addition, the production and business situation of a number of industries and sectors is still difficult; production costs are still high... In that context, many opinions say that it is necessary to continue a reasonable expansionary fiscal policy, with a focus and key points in the short term and implement a sustainable financial policy in the long term, while implementing other policies to maximize the effectiveness of supporting the economy in difficult times.

Deputy Minister of Finance Bui Van Khang emphasized that the policy of supporting taxes, fees and charges implemented quickly and promptly as in the past has proven to be effective, thereby reducing pressure on businesses and promoting economic development. The Deputy Minister said that in the coming time, it is necessary to continue studying and implementing these policies to contribute to increasing budget revenue and supporting economic growth. Along with that, emphasizing the importance of disbursement of public investment capital, the Deputy Minister of Finance said that disbursement must be reasonably decentralized from the Central to the provinces, districts and communes. Along with that, bottlenecks affecting disbursement progress such as site clearance, purchase of construction materials, etc. must be resolutely removed.

Recommending tax management reform to promote economic development, Ms. Nguyen Thi Cuc, President of the Vietnam Tax Consulting Association, said that it is necessary to promote reform, improve the collection management institution, simplify administrative procedures, and digitize tax management work according to the contents and objectives stipulated in Decision No. 508/QD-TTg approving the "Tax system reform strategy to 2030", thereby contributing significantly to reducing compliance costs for society and taxpayers. At the same time, it is necessary to enhance self-awareness, compliance with the law, improve the business environment, free up social resources and contribute to enhancing national competitiveness; promote production and business activities, and promote economic growth.

According to Ms. Cuc, in the context of increasingly developing transactions taking place on the network environment, it is necessary to have appropriate management solutions, creating the most favorable conditions for business people on digital platforms to fulfill their tax obligations to the State budget, while improving the efficiency of tax management to both ensure revenue for the State budget and create conditions to promote the development of the digital economy in a positive direction.

Mr. Tran Quoc Khanh, former Deputy Minister of Industry and Trade: Consider increasing the public debt ceiling In 2024, the processing industry and exports are the two drivers of GDP growth. But in 2025, based on a high comparison, plus the slowdown of the US and EU, we do not think that exports to the US and EU as well as China will be the driving force. Domestically, household consumption is recovering very slowly. If domestic demand continues to be weak, combined with such external exports, 2025 will be a relatively difficult year for GDP growth. Therefore, we recommend that, in the context of relatively low public debt and a budget deficit that is still under very good control, we can consider increasing the public debt ceiling a little to promote public investment as well as promote domestic aggregate demand. In particular, a very important measure is to reduce taxes or temporarily not increase taxes to stimulate consumption. In addition, the possibility of the Donald Trump administration imposing import tariffs on markets will lead to the effect of shifting investment and orders out of China. We should have an investment support fund created from the additional tax revenue from complying with the global minimum tax to design other suitable incentive packages to stimulate investment. Economist Can Van Luc: Creating conditions for businesses to access resources In recent times, the equitization and divestment of state-owned enterprises have been slower than planned; the quality and efficiency of production and business have not been commensurate with the resources held. The proportion of contribution to GDP growth and state budget revenue has tended to decrease. Regarding private enterprises, according to the General Statistics Office, in the period of 2019 - 2024, the private enterprise sector contributed 50.4% of GDP, the highest among the three economic sectors, accounting for 56.2% of total social investment capital, the growth rate of investment capital in the private enterprise sector reached 19.3%/year, higher than the growth rate of investment capital of the FDI and state-owned enterprises sectors. In the coming time, to promote business development, it is necessary to improve the investment and business environment, simplify administrative procedures, create favorable conditions and equality between the state-owned enterprise sector and private enterprises in accessing resources (land, finance, technology, human resources, infrastructure, market, incentive mechanisms, information, data; coordination mechanisms allowing private enterprises to participate in key national programs and projects currently being implemented from the state budget or by large state-owned enterprises and private enterprises...). At the same time, promote equitization, divestment, improve the efficiency of state-owned enterprises; improve the quality of corporate governance and competitiveness of Vietnamese enterprises; increase connectivity, cooperation, and develop a strong Vietnamese business community.