More cash support could stimulate economic recovery: experts

In a meeting with National Assembly chairman Vuong Dinh Hue, UNDP resident representative in Vietnam Terrence Jones stressed the importance of cash support to the vulnerable.

Vietnam has issued two support packages for Covid inflicted residents, VND62 trillion ($2.72 billion) in April last year, and VND26 trillion in July this year.

However, Jones said these packages were not enough to protect people who have lost income due to social distancing.

More cash support therefore would help stimulate economic growth, he said, adding a 5-percent GDP support package, or VND77 trillion, should be disbursed in the last quarter this year.

Echoing him, Jacques Morisset, lead World Bank economist and program leader for Vietnam, said social support programs would help ease the burden on the economy and help the vulnerable from falling into financial distress.

In order to bring the country to a "new normal", Vietnam needs to push vaccination and testing to control the pandemic and limit economic damage, he said.

He also suggested smarter solutions to simplify procedures in managing mobility.

To stabilize the macro economy, Morisset proposed the government focuses more on fiscal and less on monetary policy, as the latter could increase financial risks due to rising bad debt and lack of transparency in support packages.

Chief economist of state-owned lender BIDV Can Van Luc said Vietnam disbursed about 2 percent of its GDP last year, and less than 1 percent this year, on fiscal and monetary support to businesses and the people, according to data from his research group.

The corresponding figure in developed countries is 16 percent of GDP, and emerging economies, 7.7 percent, he said.

This means more support packages are needed as many informal workers have not benefited from the existing ones, he added.

Other experts propose the government construct an overall economic development program.

From now until the end of the first quarter next year, Vietnam should prioritize controlling the pandemic and issuing macro policies, including pushing public investment disbursement, to support businesses to survive this difficult time, said Nguyen Thi Hong Minh, head of the Central Institute for Economic Management (CIEM).

From then until the end of 2023, the government can relax economic policies and stimulate growth.

Luc said the recovery plan should be imposed nationwide instead of letting each locality decide their own strategy, which would make the plan ineffective.

Vietnam has recorded over 752,000 Covid-19 cases since the end of April, including 10,000 added Sunday.

Hanoi relaxed its social distancing rules last week, while Ho Chi Minh City is set to do so from Oct. 1.