Trong và sau đại dịch COVID-19, Việt Nam đã áp dụng đồng bộ các chính sách và biện pháp để đối phó với những thách thức chưa từng có và phục hồi nên kinh tê. Trong bài báo cáo này, tôi đã đi vào phân tích các chính sách kinh tế liên quan mà chính phủ đã thực hiện trong COVID-19 bùng phát bao gồm các chính sách tiền tệ và tài khóa. Mục đích của mỗi chính sách và những tác động của nó đối với việc phục hồi nền kinh tế khỏi đại dịch. During and after the COVID-19 pandemic, Vietnam has adopted synchronous policies and measures to cope with unprecedented challenges and recover its economy. In this report, I go on analyze relevant economic policies the government has made during COVID-19 outbreak including monetary and fiscal policies. The purposes of each policy and its impacts on reviving the economy from the pandemic.
TABLE OF CONTENT I Introduction II Definition of Monetary Policy and Fiscal Policy Monetary Policy Fiscal Policy III The influence of COVID-19 on Vietnamese economy IV The monetary and fiscal policies of the Vietnamese Government The monetary and fiscal policies 1.1 The monetary policies 1.1.1 The monetary policies in early 2020 1.1.2 The monetary policies in the last months of 2020 1.2 The fiscal policies The impacts of these policies 2.1 The monetary policy 2.2 The fiscal policy V The difficulties and challenges in execution of these policies and measures to improve 10 The difficulties and challenges in execution of these policies 10 The measures to improve the difficulties 11 VI The monetary and fiscal policies of other Government 12 China 12 USA 12 VII Conclusion 13 VIII References 13 I Introduction The COVID-19 pandemic not only affected public health but also disrupted trade, disrupted global production chains, as well as affected the economy of many countries and corporations around the world As a large open economy, Vietnam also immediately suffered many bad changes caused by the COVID-19 epidemic Thousands of businesses went bankrupt, millions of workers lost their jobs due to narrowed operations of the companies, As the epidemic progressed more complicatedly, the more difficulties that Vietnamese businesses suffered Faced with that serious situation, the Vietnamese government has come up with policies to deal with unprecedented challenges and revive the economy This report will analyze the monetary and fiscal policies used by the Government of Viet Nam as well as its purpose and impact on the post-pandemic economic recovery II Definition of Monetary Policy and Fiscal Policy Monetary Policy Monetary Policy is a strategy used by the Central Bank to control and regulate the money supply in an economy It is also known as credit policy There are two types of monetary policies, expansionary and contractionary: + Expansionary Monetary Policy: The policy in which the money supply is increased along with the minimization of interest rates + Contractionary Monetary Policy: If there is a decrease in money supply and a rise in interest rates The primary purposes of the monetary policy include bringing price stability, controlling inflation, strengthening the banking system, economic growth, etc The monetary policy focuses on all the matters which have an influence on the composition of money, circulation of credit, interest rate structure Fiscal Policy Fiscal Policy is the tax revenue and expenditure policies to influence the overall demand and supply for commodities and services in the nation’s economy It is a strategy used by the government to maintain the equilibrium between government receipts through various sources and spending over different projects The instruments used in the Fiscal Policy are the level of taxation & its composition and expenditure on various projects There are two types of fiscal policy, they are: + Expansionary Fiscal Policy: The policy in which the government minimizes taxes and increase public spending + Contractionary Fiscal Policy: The policy in which the government increases taxes and reduce public expenditure The main objective of the fiscal policy is to bring stability, reduce unemployment and the growth of the economy III The influence of COVID-19 on Vietnamese economy Like most other economies in the world, Vietnam is also affected by an outbreak of disease According to the General Statistics Office, GDP in the first months of 2020 has had a record low growth rate - only 1.81%, this is the lowest growth rate of our country in the last 30 years since 1991 and is the lowest growth rate of the months of each year in the period 20112020 [1] The following table shows the statistics of GDP growth in the first months of the year in 2018, 2019, and 2020: 2018 2019 2020 (%) (%) (%) Gross domestic product (GDP) in the first months of the year 7,08 6,76 1,81 Service industry 6,9 6,69 0,57 Industry and construction 9,07 8,93 2,98 Agriculture, forestry and fisheries 3,93 2,39 1,19 Processing and manufacturing industry 13,02 11,18 4,96 Market service industry – wholesale and retail 8,21 8,09 4,3 The market service industry – finance, banking and insurance 7,58 7,9 6,78 Year … … … … According to VNDirect, the service - tourism industry will be most affected by Covid 19 In 2019, the number of international visitors to Vietnam is estimated at 18 million, up 16.2% compared to 2018 Total revenue from tourists in 2019 amounted to 726,000 billion VND In 2020, according to the expected plan, Vietnam will welcome 20.5 million international tourists, serve 90 million domestic tourists, total revenue from tourists will reach more than 830,000 billion VND However, due to the impact of the COVID-19 epidemic, it is estimated that the number of guests staying in hotels has decreased by 60-80%; tourism industry lost billion USD A survey by the Private Economic Development Research Board showed that, if Covid19 lasted months, 74% of businesses would say they would go bankrupt The economic losses impacted by COVID-19 will multiply in the context of China's supply chains being cut off by the epidemic Our country's manufacturing, processing and manufacturing industries are heavily dependent on the supply of raw materials and input components imported from China Therefore, when the supply chain was broken, most businesses immediately fell into the situation of running out of raw materials for production In which, the industry most affected is electricity - electronics According to reports from the Ministry of Industry and Trade, electronic businesses only have enough spare parts for production until the middle or the end of March [2] Similar to the aviation industry, the Civil Aviation Administration estimated that Vietnam's aviation could lose 25,000 billion VND (more than billion USD) According to the representative of Vietjet Aviation Joint Stock Company, many response solutions are proposed such as restructuring flights, opening new routes to India , but the plan is also temporarily suspended because the epidemic spreads In the short term, Vietjet must reduce working hours and increase online activities In addition, the second quarter of this year also saw the highest unemployment rate in the past 10 years, at 2.73% According to the General Statistics Office, as of the end of June 2020, up to 30.8 million people aged 15 and over are negatively affected by the Covid-19 epidemic, including job loss and reduced working hours , reduce income… [3] IV The monetary and fiscal policies of the Vietnamese Government The monetary and fiscal policies 1.1 The monetary policies 1.1.1 The monetary policies in early 2020 ❖ Adjustment of interest rates The Prime Minister issued Instruction No.11/CT-TTg on March 4, 2020, implementing urgent tasks and solutions to remove difficulties for production and business, ensure social security to cope with COVID-19 In order to match the developments of the macro-economy, international financial markets and to remove difficulties for production and to remove difficulties for production and business, the State Bank of Vietnam decided to adjust the interest rates in Decision No 418 / QD -NHNN, Decision No 419 / QD-NHNN, Decision No 420 / QD-NHNN, Decision No 421 / QD-NHNN, Decision No 422 / QD-NHNN, and Decision No 423 / QD-NHNN [5] On August 16, 2020, the State Bank announced its decision to further reduce some of the operating rates with a decrease of 0.2-0.5% per year Most notably, the State Bank has lowered the interest rate on compulsory reserve deposits at the Bank to 0.5% per year ❖ Maintaining stability and expanding credit capital sources: On March 31, 2020, The Central Bank issued Instruction No.02/CT-NHNN on urgent solutions of the banking sector to strengthen prevention, combat, and overcome difficulties caused by the COVID-19 epidemic Organizations at the Central State Bank will provide refinancing loans to credit institutions (CIs) to implement programs under the direction of the Government Next, the Central State Bank will directly work with the Chairman of the Member’s Council/ Board of Directors/ General Directors of CIs to promote effective implementation of solutions to remove difficulties for customers who were affected by epidemics such as restricting the repayment term, exempting or reducing interest on old loans, keeping the debt group in accordance with Circular 01/2020/TT-NHNN and giving new loans with preferential interest rates 1.1.2 The monetary policies in the last months of 2020 The organizations continued to drastically and effectively implement the assigned tasks and solutions in Instruction No.01/CT-NHNN (3/2/2020), Instruction No.02/CT-NHNN (31/3/2020), and the epidemic prevention and control measures mentioned in the official telegram No 02, 03, 04 on COVID-19 prevention of the State Bank In August 2020, the State Bank of Vietnam has just issued document No.5596/NHNNVP pointing a number of important tasks that the entire industry must perform in the last months of 2020, including: + The administration of monetary and credit policy must follow economic developments at home and abroad to forecast, assess the situation and promptly advise and propose solutions to monetary and credit policy management appropriately, ensuring market liquidity, controlling inflation, supporting stability, and facilitating the faster reduction of interest rates + Monitoring world and domestic gold prices to promptly inform and recommend the people, stabilize market sentiment, not to affect macro stability + Regarding the promotion of payment activities, it is necessary to thoroughly study and complete a draft Decree replacing Decree No 101/2012 / ND-CP on non-cash payments, ensuring feasibility and compliance in line with the development orientations of payment activities in the coming time and improve the management efficiency of the State Bank for payment services + Regularly inspect and supervise the implementation of Circular 01/2020 / TT-NHNN correctly and effectively Proactively balance between capital sources and capital used to ensure liquidity The strict control of credit in potentially risky sectors, especially investment credit, real estate, securities, BOT, credit institutions to contribute capital, purchase shares, and invest in bonds enterprise,… Strictly complying with the instructions of the Government, the Prime Minister and the State Bank on reducing operating costs, salary, bonus, and profit in order to continue lowering the actual lending interest rate for existing loans and new loans, support and accompany businesses and people to overcome difficulties, contribute to the recovery of business after the epidemic In terms of restructuring associated with bad debt handling and operational safety, continuing to effectively implement the approved restructuring plan associated with bad debt handling by 2020, focusing on handling bad debts , collateral of bad debts, and concentrating financial resources for bad debt handling; Minimize bad debt deflation Continue to healthy finance, increase charter capital 1.2 The fiscal policies In the first months of the year, the Ministry of Finance submitted to the Government and the National Assembly for approval resolutions; submitted to the Standing Committee of the National Assembly for consideration resolutions, of which have been adopted; submitted to the Government for promulgation 12 decrees, submitted to the Prime Minister for promulgation decisions; at the same time, issued according to its competence 63 circulars Among these, there are many regulations related to the group of financial solutions to remove difficulties for people and businesses affected by the COVID-19 epidemic Among them, it is necessary to mention Decree No.41/2020/ND-CP on the extension of the time limit for VAT payment, corporate income tax, personal income tax, and land rental for business and household business [6] As of July 30, the tax agency had received more than 179.000 requests for tax and land rental extension, with an amount of VND 54.6 trillion The Ministry of Finance has submitted to competent authorities to decide on the exemption or reduction of a number of taxes, fees, and charges with an estimated value of about 20 trillion VND In particular, a series of fees and charges have been deeply cut by the Ministry of Finance, facilitating and reducing costs for people and business, such as: + 70% reduction in the fee for business registration + 67% discount on the fee for issuing the operation license of credit institutions + 50% discount on the fee for issuing the operation license of credit institutions + 50% reduction of 20/22 fees and charges in the securities sector Minister of Finance Dinh Tien Dung affirmed that financial policies always focus on promoting solving difficulties for businesses and people Along with the reform of administrative procedures, strengthening revenue management, strict assurance, avoiding the profiteering of policies to fraud, tax evasion,… are the most fundamental solutions implemented by the Ministry of Finance in the short term and long term to contribute to economic recovery The Finance sector continues to promote administrative reform and administrative procedures to prepare for new investment flows At the ninth session of the National Assembly, Minister Dinh Tien Dung said that we must prepare for selective investment flows, so it is extremely important to improve the investment environment; therefore, the Finance sector continues to promote modernization reform, administrative procedure reform, facilitating investment and business However, before the second wave of the COVID-19 epidemic, Minister Dinh Tien Dung said that the Ministry of Finance continued to review fiscal policies to ensure better service for the recovery of the economy; for the restart of businesses, especially in a particular context in Vietnam, there are more than 93% of small and micro-enterprises The Minister said that these businesses are greatly affected, so we review to ensure reducing obligations for people and businesses, promoting production and business activities The impacts of these policies 2.1 The monetary policy The central bank’s lowering of interest rates does not seem to have much effect of boosting credit growth in the current context, which is believed to mainly affect the income of banks, commercial goods, and reduce the cost burden on the state budget Currently, the interest rate level is at the lowest level in 10 years, but credit growth is still sluggish The main cause of slow credit growth is the weak demand for credit in the economy when production and business activities are delayed due to the pandemic While a pandemic also increases the level of risk Bao Viet Securities Company believes that the State Bank’s decision to cut interest rates is mainly oriented and psychological, and whether Vietnam really loosens monetary policy or not, must wait for real data on credit growth An expert said that the reduction of the above interest rates is professional between the State Bank and commercial banks, has not had a direct impact on the corporate lending market However, the interest rate cut also increases the exchange rate between the VND and the Chinese yuan, avoiding negative effects on Vietnam’s exports and competitiveness with an important trading partner, China 2.2 The fiscal policy The Government issued Decree No.41/2020/NĐ-CP on the extension of the time limit for VAT payment, personal income tax, and land rental for enterprises and business households, initially promoting well As of July 30, the tax agency had received more than 179.000 requests for tax and land rental extension, with an amount of 54.6 trillion VND With the social security support package of 62.000 billion VND, according to the Ministry of Labor-Invalids and Social Affairs, localities have so far approved for 15.8 million subjects with the amount of about 20.000 billion In which, about 400 billion VND to support businesses and people to relax payment of social insurance and 2.500 billion VND to pay unemployment insurance With business, if the fiscal burden is pushed up too much, it can cause macroeconomic instability in the long term and lead to consequences of the economy At the same time, interest expenses will also be a burden for businesses when there is no revenue V The difficulties and challenges in execution of these policies and measures to improve The difficulties and challenges in execution of these policies At the regular meeting of the Government in July 2020, held on August 3, Prime Minister Nguyen Xuan Phuc pointed out external risks and challenges The biggest risk is still the unpredictable development of COVID 19, especially important partners were severely affected Secondly is the escalating trade and technology tensions between many countries Thirdly is complex geopolitics, natural disasters, and floods affect economic resilience The Prime Minister emphasized that the challenge facing Vietnam is a resurgence of the epidemic, threatening economic recovery Inflation has been controlled and is decreasing but there are many challenges Budget spending continues to increase, making the budget deficit 2020 forecast to increase However, Prime Minister said that, including the budget deficit, fiscal policy should continue to support monetary policy, support for employees and businesses The Government’s support package, especially the social security package, has been solved step by step, but it needs to be implemented more quickly, won and expanded, and more effectively Along with that is improving the business investment environment 10 Regarding public investment, if fully disbursed 63 billion VND, it will contribute to GDP growth by 0/4% not including creating a premise to promote private investment and foreign investment And creat jobs Therefore, the Prime Minister requested to disburse 100% of the public investment capital, including ODA capital, with strong measures The measures to improve the difficulties After clearly identifying the major difficulties and challenges facing Vietnam, Prime Minister Nguyen Xuan Phuc stated that policies must be synchronous and effective Especially the fiscal and monetary policy to strongly stimulate aggregate demand, with attention to the large enough size and scope, appropriate to immediately create growth drives and ensure the goals and orientation The implementation of the 62.000 billion VND support package recently needs to learn from the experience for more convenience The Prime Minister assigned the Minister of Planning and Investment to assume the prime responsibility for sum up and report to the Prime Minister before August 15 to report to the Government before submitting to the Politburo for comments and reporting to the National Standing Committee related issues Regarding public investment capital, including ODA capital, with strong measures Stricly handle organizations, agencies, units, and individuals that slow down and wrong regulations, consider disbursement of public investment capital as a key political task, as a basis for staff evaluation in 2020 The Ministry of Finance, the Ministry of Industry and Trade, relevant ministries and agencies have better managed the market, price, anti-smuggling, trade fraud, and appropriately protected domestic production and consumption Administrative reform, improved business investment environment is an important task to facilitate and less costly The business environment must be more open to attracting investment flows to move into Vietnam The Prime Minister suggested ministries, branches and localities must have special working groups headed by ministers, heads of branches, and Chairman of the provincial People’s Committee so that they together with the Prime Minister’s Special Working Group focus on solving problems, attracting foreign investment capital, especially from multinational companies that are moving in the region and globally President of provinces, cities, minister, and heads of 11 branches must directly address them, directing to resolve the recommendations of the people and enterprises Speed up the development of the digital economy, e-government, and epayment, e-transactions, while increasing labor productivity, keeping up with trends, and reducing the risk of epidemic spread due to direct interaction VI The monetary and fiscal policies of other Government China The Central Bank of China does not use the tools of special monetary policy such as applying zero or negative interest rates, as well as quantitative easing They use a combination of both overall and strctural policy measures, maintain ample liquidity, and promote interest rate reform to cut borrowing costs and supplement financial resources more effectively According to Director of the Central Bank’s Monetary Policy Department – Mr Ton Quoc Phong, the epidemic has caused factors of instability to increase, and the impact on the psychology of the money market is inevitable Therefore, the monetary policy needs to be more stable to deal with volatile factors [6] The three stabilization factors include: + The direction of prudent monetary policy has not changed + Maintain flexibility and moderation of operations + Persistent, determined to implement the normal monetary policy USA Since March 3, 2020, the Federal Reserve (FED) has urgently lowered interest rates by 0.5%, this is the strongest reduction since the end of 2018 From March 26, 2020, FED applies a quantitative easing program (QE) through the purchase of government bonds and asset-backed securities Lower discount rate on loans from 1.5% to 0.25% and lower required reserve ratio to 0% [5] In addition, the US Congress has coordinated with the White House to offer support packages to reduce damage and stimulate the economy In general, the monetary and fiscal policies introduced by the US government are similar to those of Vietnam 12 VII Conclusion The monetary and fiscal policies of the Vietnamese Government have initially achieved good results in stabilizing and restoring the economy in the COVID-19 epidemic However, understanding and assessing the impact of each policy tool will be the basis for making policies with specific orientation to the pandemic Vietnam needs to focus on adjusting its economic structure towards a strong development in the area less affected by the pandemic To expand production zones, industrial parks, and economic zones in order to develop agricultural mode processing, the supply of applied data, and develop professional auxiliary Governments should focus on areas with high demand during an epidemic, such as the digital economy, online guest rooms, and public health checks, television, and online education VIII References Tổng cục Thống kê (Junly, 2020) Tình hình kinh tế - xã hội tháng đầu năm 2020 Retrieved from: https://gso.gov.vn/Default.aspx?tabid=621&ItemID=19226 Nhân dân Điện tử (March, 2020) Doanh nghiệp chung tay đối phó dịch COVID-10 Retrieved from: https://nhandan.com.vn/tin-tuc-kinh-te/doanh-nghiep-chung-taydoi-pho-dich-covid-19-451156/ Dân sinh (April, 2020) COVID 19, ảnh hưởng nặng nề đến nhóm lao động phi thức Retrieved from: https://baodansinh.vn/covid-19-anh-huong-nang-ne-dennhom-lao-dong-phi-chinh-thuc-2020081415175782.htm Tin tức pháp luật (March, 2020) Thông báo điều chỉnh lãi suất điều hành Ngân hàng Nhà nước Việt Nam Retrieved from: https://thuvienphapluat.vn/tintuc/vn/thoi-suphap-luat/tai-chinh/27866/thong-bao-dieu-chinh-lai-suat-dieu-hanh-cua-ngan-hangnha-nuoc-viet-nam Vnexpress (April, 2020) FED cơng bố chiến lược sách tiền tệ Retrieved from: https://www.msn.com/vi-vn/money/news/fed-c%C3%B4ng-b %E1%BB%91-chi%E1%BA%BFn-l%C6%B0%E1%BB%A3c-ch%C3%ADnh-s %C3%A1ch-ti%E1%BB%81n-t%E1%BB%87-m%E1%BB%9Bi/ar-BB18rMoy 13 VOV (April, 2020) Trung Quốc khẳng định áp dụng sách tiền tệ thận trọng, linh hoạt Retrieved from: https://vov.vn/the-gioi/trung-quoc-khang-dinh-ap-dung-chinhsach-tien-te-than-trong-linh-hoat-1087988.vov 14 ... lược sách tiền tệ Retrieved from: https://www.msn.com/vi-vn/money/news/fed-c%C3%B4ng-b %E1%BB% 91- chi%E1%BA%BFn-l%C6%B0%E1%BB%A3c-ch%C3%ADnh-s %C3%A1ch-ti%E1%BB%81n-t%E1%BB%87-m%E1%BB%9Bi/ar-BB18rMoy... rate - only 1. 81% , this is the lowest growth rate of our country in the last 30 years since 19 91 and is the lowest growth rate of the months of each year in the period 2 011 2020 [1] The following... Agriculture, forestry and fisheries 3,93 2,39 1, 19 Processing and manufacturing industry 13 ,02 11 ,18 4,96 Market service industry – wholesale and retail 8, 21 8,09 4,3 The market service industry –