Vietnam needs $29 bln recovery package: economists

The potential economic recovery package could be VND445.76 trillion, or 5.5 percent of GDP in 2021, Can Van Luc, chief economist at the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) and member of the National Financial and Monetary Policy Advisory Council, said at the Vietnam Economic Forum 2021 themed "Recovery and Sustainable Development" held in Hanoi on Sunday.

He predicted GDP would grow 4-4.5 percent in 2022. "Without special support programs, without fiscal and monetary stimulus packages, Vietnam will miss opportunities, be left behind, and not realize its five-year economic development targets," Luc said.

He said state budget deficit and public debt are now better controlled and within the safety threshold. Direct and indirect measures should be taken so that banks can lower lending interest rates by 0.5-1 percentage points.

A group of experts at Vietnam Academy of Social Sciences said the scale of potential of the economic recovery program can amount to 6-8 percent of GDP.

Bui Quang Tuan, Director of the Vietnam Institute of Economics under the academy, said the aid package should be large and strong enough to support both supply and demand sides, and growth-supporting solutions should be associated with digital transformation and green growth.

Tuan said the overall economic recovery program, to be implemented from 2022 to 2023, could amount to some VND666 trillion, or 8 percent of the 2020 GDP. Specifically, some VND76 trillion could be earmarked for healthcare, VND58 trillion for social security, VND244 trillion for businesses, and VND288 trillion for public investment.

Several economists agreed that the potential package should focus on aiding employees and enterprises over the next two years, and funds should mainly come from reducing expenses, accelerating privatization of state-owned enterprises and issuing government bonds.

The economy is set to grow 2.5 percent this year if last quarter growth is 5.3 percent, according to the General Statistics Office.

Vietnam’s GDP shrank by 6.17 percent in the third quarter, as social distancing and other Covid-19-related restrictions hurt the economy.