The fiscal policy affirms the pivotal role of the economy

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

Minister of Finance Ho Duc Phoc 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 is currently increasing by 2.73% and public debt/GDP is estimated at 43%, lower than the ceiling of less than 60% of GDP that is allowed by the National Assembly. In terms of imports and exports, currently, the country has witnessed a trade surplus of over US$8 billion. Along with that, the budget deficit is 3.74% which is 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 Phoc affirmed that, in 2022, fiscal policy has played a pivotal role in the economy. Accordingly, revenue collection is expected to reach VND1,614 quadrillion, exceeding VND 202.4 trillion, increasing 14.3% compared to current appropriation and rising 2.9% compared to the plan for 2021. In particular, domestic revenue still achieved a growth rate of 9.8%. According to the Minister, 2022 is the year of the largest tax reduction in the history of the tax sector when it has reduced about VND 233 trillion; tax exemption, reduction and extension have been implemented with more than VND151 billion in the first 9 months of 2022.

According to Minister Ho Duc Phoc, in 2022, to support the recovery of the economy, the Ministry of Finance has coordinated with ministries and sectors to advise the Government and the Prime Minister to promulgate a recovery support package and socio-economic development which is up to VND347 trillion. In particular, there is VND131 trillion invested in infrastructure; VND14 trillion invested in health; VND38 trillion of preferential capital for the Bank for Social Policies to implement credit programs; VND40 trillion to support interest rate of 2%; VND 6,600 billion to support rent for workers.

The Ministry of Finance has also launched fiscal policies that focused on supporting people and businesses. Minister Ho Duc Phoc 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 types of fees and charges; reduce environmental protection tax on petroleum, contributing to remove difficulties for people and businesses.

The Ministry of Finance has also advised the Government to establish a Vaccine Fund for Covid-19 Prevention, which has mobilized nearly VND11 trillion so far, the current balance is more than VND3 trillion. Along with resources from the budget, up to now, free injections have been given to the entire population.

Also according to Minister Ho Duc Phoc, 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 referential import tax to 10% in order to reduce gasoline prices and 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, and overcome difficulties to promote production and business.

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

The newly updated data from the Ministry of Finance showed that, in the first ten months of the year, the central budget spent VND 4,893.2 billion from provisions (including provisions transferred from 2021 to 2022) to add budget to the expense of Covid-19 pandemic prevention of the Ministry of National Defense (VND 729.8 billion) and support for localities (VND 3,489.5 billion) in funding for pandemic 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 which were damaged by natural disasters and epidemics.

Along with that, temporarily grant an additional VND 4,149 billion to 22 localities to implement the policy of supporting house rent for laborers following 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, economist Vo Tri Thanh said that we could perceive from two angles.

From a direct perspective, through the survey results, fiscal policy was meaningful in supporting objects and businesses to recover and develop production and business.

Basically, fiscal policy affected both supply and demand. Looking more specifically, the support packages, economic recovery and development programs have quickly come to life. In an indirect perspective, fiscal and monetary policies contributed to maintaining macroeconomic stability. This was a very important premise to create more trust in the market and investors and "promote" businesses to boost production and business activities.