Vietnam needs to speed up fiscal support: experts

By Quynh Trang   December 1, 2021 | 06:59 am PT
Vietnam needs to speed up fiscal support: experts
A worker is seen at a construction site in Ho Chi Minh City in July 2021. Photo by VnExpress/Quynh Tran
Vietnam needs to speedily reboot its economy with focus on fiscal policy to catch up with other countries following the Covid-19 blow.

Some countries have reached the end of the road in their recovery process while Vietnam is only half way and its authorities are set to face pressure in inflation and currency in the near future, said economist Le Xuan Nghia at a forum Tuesday.

Nguyen Minh Cuong, principal country economist of Asian Development Bank, said Vietnam is still tip toeing in its fiscal policy compared to other Asian countries.

With International Monetary Fund stating Vietnam still has room for more fiscal support, the country should focus on this next year, he said.

Many countries have been prioritizing direct government spending to support economic recovery instead of delaying tax payments or giving tax breaks, Cuong said.

This means Vietnam could increase its support package from 2 percent of GDP to 5-7 percent, focusing on doing things "fast and effective," he commented.

Nghia further supported the 5-7 percent GDP support package with priorities for short-term solutions to recover the economy.

Apart from loan interest incentives, there should be direct financial support with cash, he said.

Phan Duc Hieu, a standing member of National Assembly’s Economic Committee, said rapid support is needed as time is running out, but it is difficult to identify right from the start how much cash should be given out.

"I’m not comfortable with having to say how many VND trillions should be given out while not knowing where to distribute the cash." (VND1 trillion = $44.02 million).

This means authorities need to identify who should receive the support before saying how much money is spent.

One risk in giving support is helping businesses that are unable to survive. This only delays their inevitable demise, he said, adding that only companies that can transform and adapt to the new situation should be assisted.

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