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.
Trang 2TABLE OF CONTENT
IV The monetary and fiscal policies of the Vietnamese Government 5
1.1.2 The monetary policies in the last 6 months of 2020 6
V The difficulties and challenges in execution of these policies and measures to improve 10
1 The difficulties and challenges in execution of these policies 10
Trang 3I 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
1 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
2 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
Trang 4and 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 6 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 6 months of each year in the period
2011-2020 [1]
The following table shows the statistics of GDP growth in the first 6 months of the year in 2018, 2019, and 2020:
Gross domestic product (GDP) in the first 6 months of the year 7,08 6,76 1,81
The market service industry – finance, banking and insurance 7,58 7,9 6,78
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%
Trang 5compared 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 7 billion USD A survey by the Private Economic Development Research Board showed that, if
Covid-19 lasted 6 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 1 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
1 The monetary and fiscal policies
1.1 The monetary policies
1.1.1 The monetary policies in early 2020
Trang 6❖ 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 6 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
Trang 7In August 2020, the State Bank of Vietnam has just issued document
No.5596/NHNN-VP pointing a number of important tasks that the entire industry must perform in the last 6 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
Trang 8financial resources for bad debt handling; Minimize bad debt deflation Continue to healthy finance, increase charter capital
1.2 The fiscal policies
In the first 6 months of the year, the Ministry of Finance submitted to the Government and the National Assembly for approval 3 resolutions; submitted to the Standing Committee of the National Assembly for consideration 4 resolutions, of which 2 have been adopted; submitted to the Government for promulgation 12 decrees, submitted to the Prime Minister for promulgation 2 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
Trang 9The 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
2 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
Trang 10The 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.
1 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 3 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