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.
Monetary and Fiscal policies against COVID-19 Contents I Introduction Purpose of report Conceptual background .4 II Analysis of Vietnam’s monetary and fiscal policies against COVID-19 pandemic Vietnam’s monetary policies against COVID-19 pandemic Vietnam’s fiscal policies against COVID-19 pandemic Difficulties and Challenges of Vietnam’s monetary and fiscal policies against COVID-19 pandemic Impacts of monetary and fiscal policies on Vietnam’s economy .7 III Recommendations for Government IV Conclusion V References I Introduction Purpose of report The purpose of this report is to present the results of the monetary policy and fiscal policy analysis proposed by the Government and the Central Bank to address the economic difficulties of the country during the COVID-19 pandemic outbreaks in Vietnam This study has analyzed the effects of the COVID-19 pandemic on the Vietnamese economy The monetary and fiscal policies adopted by Vietnam during this period will also be analyzed to see the difficulties, challenges and both positive and negative effects on the Vietnamese economy Recommendations also give to help address monetary and fiscal constraints and economic constraints This report organized as follows: Section I – Introduction Section II – Analysis of Vietnam's monetary and fiscal policies against COVID-19 pandemic Section III – Recommendations for Government Section IV – Conclusion Section V - References Conceptual background The global economy has been affected by the 2019 coronavirus outbreak This epidemic that happened in early 2020 in China has caused negative impacts on the economies of the countries, especially in eight sectors: health and human resources, tourism, transportation, retail (people's consumption), foreign trade, investment (both direct and indirect), chain production industries, and financial services In the general context of the COVID-19 epidemic, the growth rate of the Vietnamese economy is also decreasing, and most notably, the eight sectors mentioned above According to data from the General Statistics Office, Vietnam's economic growth in the first quarter of 2020 was only 3.82%, which is the lowest increase compared to the same period of years in the period of 2011-2020 In the first two months of the year, 16,151 enterprises were stopping their business activities nationwide, up 19.5% over the same period About 2,807 enterprises have completed dissolution procedures The production scale of enterprises also narrowed In the economic sectors, tourism with a specific feature of an integrated economic field is expected to suffer many injuries and can last even after the end of the epidemic In March 2020, the number of international visitors to Vietnam estimated at 449.9 thousand arrivals - down 63.8% from the previous month, of which arrival by air4 dropped 62.3%; by road 65.9% reduction; by sea by 83.6% (Le, 2020) Along with the decline in international arrivals, properties closed, and tourism workers were unemployed Tourism is an integrated economic sector, related to many other industries, such as transportation, accommodation, food and drink services , so the impact of the Covid-19 epidemic causes all revenue to decline According to the Vietnamese News Agency, the Government, Ministries and Branches have made great efforts to prevent and fight the epidemic, protect the people, and at the same time have made a policy to promptly support the business community - the force to keep a pivotal role in the economy The Ministry of Planning and Investment has proposed to the Government to assign the State Bank to coordinate with relevant agencies to immediately study several monetary and financial policy packages to solve the difficult economic situation Fiscal policy is the use of government spending and revenue to influence the economy In principle, it manipulates the level of aggregate demand in the economy to achieve economic goals, stabilize prices, and economic growth The Government sets fiscal policies with the tools for implementing taxes and government spending amounts Monetary policy is the process by which a country's monetary authority controls the money supply, often targeting a rate of interest to achieve a set of targets towards growth and stability of the country's economy It manipulates the money supply to influence outcomes like economic growth, inflation, the exchange rate for other currencies and the unemployment rate Compared with the fiscal policy, the monetary policies are introduced by the Central Bank with the implementation tool which is the interest rate; reserve requirement; exchange rate policy; quantitative easing; open market operations etc The combination of both types of policies to help realize the economic growth target and solve the current difficulties of our country during the COVID-19 epidemic has not pushed back II Analysis of Vietnam’s monetary and fiscal policies against COVID-19 pandemic Vietnam’s monetary policies against COVID-19 pandemic According to a report of the International Monetary Fund (IMF), the State Bank of Vietnam (SBV) has issued guidelines to commercial banks to reschedule loans, reduce/exempt interest, and provide loan forbearance By mid-July, banks registered a credit package with a lower interest rate (a credit package worth 300 trillion dong - about 3.8 per cent of GDP) Moreover, banks have also supported about 950,000 customers with outstanding loans of about VND 2,100 trillion Financial institutions are offering discounts and fees, such as securities service fees The Vietnam Social Policy Bank (VSPB) has agreed to allow affected businesses to borrow money without interest (as planned, the total value of the loan is 16.2 trillion dong - about 0.2% of GDP) to pay salaries for temporary workers For credit institutions, the State Bank required credit flows to priority economic sectors and accelerated consumer lending to meet the legitimate needs of individuals and households From March 31st, the SVB directed credit institutions to proactively reduce salaries and bonuses, reduce operating costs, adjust business plans, and reduce interest rates by using savings The SVB is willing to pump liquidity (including through the refinancing mechanism) so that VSPB and credit institutions can implement the programs of the Government and credit institutions to deal with bad debts SBV has issued a circular on refinancing VSPB up to VND16 trillion at 0% interest rate Vietnam’s fiscal policies against COVID-19 pandemic When the COVID-19 pandemic is booming, the Government's fiscal policies become very important According to the IMF, the Government has launched a financial support package with a total value of 279 trillion VND - about 3.6% of GDP with mainly tax-related measures According to Decree 41/CP, the Government postpones paying VAT, corporate income tax and land rental obligations for five months, and deferred PIT payment until the end of the year The estimated deferred payment is VND 180 trillion, equivalent to 2.4% of GDP In which, 56 trillion VND, more than 1/3 of the total tax amount and land rental extension package, has been disbursed The Government also passed new measures including a 50% reduction in registration tax and a postponement of excise tax on domestically produced cars, a 15% reduction in land rent, a 30% deduction of current environmental protection tax for jet fuel from August to December 2020, a reduction or exemption of charges, a 30% reduction in CIT rate for small and micro-enterprises, and an increase in PIT deduction ahead of schedule Besides, other measures targeting those who are medical facilities, businesses, companies and businesses are also being implemented These include: medical device duty exemption; business registration fee reduction is ready from February 25th (exemption of 1-year business registration tax for newly established business households; exemption of business registration tax for the first 3-years for small and medium enterprises); streamline tax and custom checks and inspections at companies; and allow businesses and employees to postpone contributions (up to 12 months) to the retirement and death fund without interest penalty (total late payment estimated at VND9.5 trillion or 0.1% of GDP) According to Resolution 42/CP, the amount of cash, worth 36 trillion VND, was approved to be transferred to the workers and affected households during the period from April to June About 13 trillion VND has disbursed for the subjects under this Resolution Currently, the number of people benefiting estimated at more than 10% of the population Difficulties and Challenges of Vietnam’s monetary and fiscal policies against COVID-19 pandemic Fiscal policy and monetary policy are two main policies that Vietnam introduced to deal with the difficulties that the country's economy is facing during the COVID-19 epidemic outbreak in Vietnam and affected by the global economy However, these policies are causing difficulties and challenges In the current period, when the COVID pandemic is present in most countries around the world, and the global economy tends to decline seriously, the economic downturn is inevitable The use of monetary and fiscal policies only intended to maintain the stability of the country's economy During the epidemic period, the total supply and consumption capacity of the people increased, and the risk of inflation was always high The uncontrolled COVID-19 epidemic causes people to reduce spending and increase savings Therefore, the purpose of economic support policies is not to support growth but to maintain the economy’s capacity and ensure that it is not exhausted In a special situation like the COVID-19 pandemic, the old monetary policies won't work Since the primary purpose of monetary and fiscal policies is to stabilize the economy, policies aimed at promoting consumption are no longer appropriate in situations where most businesses, shopping centres and entertainment forced to close the door Monetary policies such as lowering interest rates and increasing liquidity are ineffective The main reason is that businesses not have the demand for loans during this period At the same time, due to the interrupted supply, many enterprises will have no revenue, leading to insolvency then no banks will lend at any interest rates, and the cost of borrowing is a burden for them Impacts of monetary and fiscal policies on Vietnam’s economy Thanks to the combination of using fiscal and monetary policies, Vietnam's economy is on the way to recovery and development According to The Economist, Vietnam belongs to the group of safe economies after the Covid-19 pandemic thanks to stable financial indicators (there are four financial strength indicators, including public debt, external debt, expenses for borrowing and foreign reserves) In June 2020, retail, import and industrial sales all increased That is a more positive point than most regional economies According to a report of the General Statistics Office on the socio-economic situation, in the second quarter of 2020, Vietnam's gross domestic product (GDP) estimated to still grow slightly, about 0.36% over the same period last year while the GDP of many other economies declined significantly in this quarter Along with the positives taking place in the economy, policies have also been limited In fiscal policy, the government is targeting a 100 per cent disbursement of public investment capital valued at VND 686 trillion or nearly per cent of GDP (of which VND 225 trillion carried over from previous years) However, despite the government's efforts, disbursement of public investment is still slow, meeting merely 36 per cent of the budget plan in the first seven months Moreover, the State Treasury may face liquidity challenges in the short term Since most of the solution is to postpone tax payments for the next few months, the tax administration will recover this tax revenue before the end of this year III Recommendations for Government In the current difficult period, the solution that the Government can apply to restore the economy is to continue using fiscal and monetary policies, especially fiscal policies That is a more effective policy with current constraints Both of these two policies need to aim at overcoming difficulties, supply-demand activities rather than promoting the economy to create a stepping stone for economic development With monetary policy, the Government should pay attention to the liquidity of business households and businesses The State Bank of Vietnam needs to issue guiding documents soon, specifying criteria to identify beneficiaries and continue indirect support such as refinancing loans, lending on the open market so that credit institutions can access a lower cost funding share Moreover, the use of many tools and measures to control inflation, stabilize the exchange rate, the forex market and the gold market is also necessary That helps people and businesses feel secure to business With fiscal policy, supporting aggregate demand is an urgent task The Government should accelerate the disbursement of public investment, especially large projects, and infrastructure investment projects that have been approved under the plan According to estimates in Vietnam, when public investment disbursement increases by 10%, GDP growth will increase by 0.6% In addition, the Government can integrate other policies to support workers to find jobs and increase income Regulating production activities of industries is to avoid high inflation Strengthening the management of information and communication activities, helping people and businesses are to raise awareness and responsibility while the COVID-19 epidemic breaks out in Vietnam IV Conclusion In summary, monetary and fiscal policies are the most important policies that have direct effects on the national economy against COVID-19 pandemic In the context of the 2nd COVID-19 pandemic outbreak in Vietnam, the choice of monetary and fiscal policies for the economy is necessary Stabilizing the economy, especially the balance of supply and demand in the market, is the goal that the monetary and fiscal policy should focus To solve the current problem, we need to use a combination of these policies together and address the hard-solving issuses facing the economic sector V References The impact of the COVID-19 pandemic on Vietnam by economy: Scenarios And Actions Retrieved from: https://cms.vietnamreport.net/source/The%20Impact%20of%20the%20COVID19%20Pandemic%20on%20Vietnam%E2%80%99s%20Economy%20Scenarios%20a nd%20Actions.pdf Le, K.A., (2020, June) Ảnh hưởng Covid-19 dịch vụ tới ngành Du lịch Việt Nam Tạp chí Cơng thương Retrieved from: http://www.tapchicongthuong.vn/bai-viet/anhhuong-cua-dich-covid-19-toi-nganh-du-lich-viet-nam-72311.htm COVID-19: Tác động tới kinh tế Việt Nam giải pháp ứng phó (2020) Tạp chí Tài Retrieved from: http://tapchitaichinh.vn/su-kien-noi-bat/covid19-tac-dong-toikinh-te-viet-nam-va-cac-giai-phap-ung-pho-319251.html Policy responds to COVID-19 Retrieved from: https://www.imf.org/en/Topics/imfand-covid19/Policy-Responses-to-COVID-19#T The Economist: Kinh tế Việt Nam an toàn sau dịch Covid-19 (2020) Retrieved from: https://thoibaokinhdoanh.vn/viet-nam/the-economist-kinh-te-viet-nam-an-toan-saudich-covid-19-1068019.html Báo cáo tình hình kinh tế xã hội Quý II tháng đầu năm 2020 Retrieved from: https://www.gso.gov.vn/default.aspx?tabid=621&ItemID=19651 Việt Nam cần làm để sớm hồi phục kinh tế? Retrieved from: http://tapchitaichinh.vn/nghien-cuu-trao-doi/viet-nam-can-lam-gi-de-som-hoiphuc-kinh-te-323394.html ... https://cms.vietnamreport.net/source/The %20 Impact %20 of %20 the %20 COVID19 %20 Pandemic %20 on %20 Vietnam%E2%80%99s %20 Economy %20 Scenarios %20 a nd %20 Actions.pdf Le, K.A., (20 20, June) Ảnh hưởng Covid-19 dịch vụ... economic growth in the first quarter of 20 20 was only 3. 82% , which is the lowest increase compared to the same period of years in the period of 20 11 -20 20 In the first two months of the year,... epidemic In March 20 20, the number of international visitors to Vietnam estimated at 449.9 thousand arrivals - down 63.8% from the previous month, of which arrival by air4 dropped 62. 3%; by road