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Thursday, January 20 2022
Tiếng Việt
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Date 12/11/2021-14:34:00 PM
Deputy Minister Tran Quoc Phuong works with the IMF Working Group
(MPI) - On November 12th, 2021, a webinar was held between Deputy Minister Tran Quoc Phuong and the International Monetary Fund (IMF) Working Group led by Era Dabla-Norris, Mission Chief to Vietnam and Division Chief in the IMF's Asia and Pacific Department.
IMF Mission Chief Era Dabla-Norris shares the working group's researches. Photo: MPI

On behalf of the IMF Working Group, Mission Chief Era Dabla-Norris expressed her gratitude to the Ministry of Planning and Investment (MPI) and relevant agencies for their coordination to organize this webinar. As stated by Era Dabla-Norris, Vietnam's successful control of the pandemic in 2020 has been challenged by the recent COVID-19 outbreak due to the Delta variant and prolonged social distancing periods. However, she believed that the policies of Vietnamese Government had proven their effectiveness in confronting risks, ensuring the safety of the people’s livelihood.

Sharing researches of the IMF Working Group, Ms. Era Dabla-Norris informed that the COVID-19’ impacts on the Vietnamese economy had become more serious as investment and consumption sectors were both affected in 2021. Lower-income households and Small and Medium-sized Enterprises (SMEs) are been the worst suffered; while upper-income households and larger businesses have generally more resilience, whichwill increase inequality and inflation globally.

Vietnam’s GDP is forecasted to grow by 2.0-2.5% in 2021 and then rebound to 6.6% next year, according to the IMF Working Group. This can be considered as the recovery of the economy along with the economic stimulus packages being discussed by the National Assembly of Vietnam. However, the risk of declined growth tends to increase when the complicated COVID-19 pandemic is ongoing; weak service activities may affect household businesses, enterprises and labor market. This will likely leave lasting scars on the economy in the future, increase bad debts at banks and pose risks of financial unstability; and The increase in demands could also raise inflationary pressures due to the current domestic and global supply chain disruptions.

On the bright side, the fiscal policies expected in the Economic Recovery will support to achieve a higher growth in 2022 and limit possible risks; Monetary policies need to be maintained with a supportive orientation for the country’s growth, while the country should be alert to inflationary pressure and secure the stability of the financial system.

Moreover, the upcoming support packages need to include measures to ensure macroeconomic stability towards the overall goals of the 5-year socio-economic development plan for the 2021-2025 period and the 10-year socio-economic development strategy for the 2021-2030 period. The health care system needs to continue to be prioritized to fight against future shocks; effective disbursement of public investment should be strongly promoted; while support for economic recovery and guarantee for financial system should remain balanced. It is the time for Vietnam to accelerate necessary reforms, unified policies and capital development measures to help the country achieve its goal of becoming a developed and high-income nation by 2045.

Deputy Minister Tran Quoc Phuong (center) speaks at the conference. Photo: MPI

At the conference, Deputy Minister (DM) Tran Quoc Phuong congratulated the IMF Working Group for their close coordination with the MPI and relevant agencies over the past time. As mentioned by DM Phuong, the IMF Working Group’s information is urgently crucial and practical as the MPI and relevant ministries and sectors are working on the Program for socio-economic recovery and development.

With the rapid spread of the Delta variant, Vietnam has been forced to apply strong measures, including prolonged social distancing, which has caused supply disruption, production postponement, and affected lower-income people’s lives. Vietnam’s GDP only increased by 1.42% in the first nine months of 2021 and plummeted by 6.17% in the third quarter of 2021.

However, the macro, fiscal and monetary policies remain positive as core inflation is subdued. The average CPI in the nine months of 2021 only increased by 1.82% over to the same period in 2020. The budget revenue and expenditure still suffice the critical tasks of the economy, especially health expenses for vaccines and other equipment are successfully maintained.

Especially, the Government had issued the Resolution No. 128/NQ-CP on provision regulations on “safety, flexibility, and effective control of COVID-19 epidemic” in October 2021 to restore economic activities in the new normal. The macroeconomics in October has shown many positive signs when production and business activities were gradually recovering; for example, the number of newly registered enterprises and enterprises resuming operation sharply increased; trade, services and tourism accelerated; also, total retail sales of consumer goods and services rebounded in October.

As referred by DM Tran Quoc Phuong, the socio-economic plan, the State budget plan in 2022 and recommendations on the economic recovery and development plan of Vietnam in the coming period would be discussed and approved at the 2nd Session of the 15th National Assembly.

The MPI is assigned to coordinate with relevant ministries and sectors to develop the economic recovery project. The major orientations are to ensure resources for the economic recovery and maintain the macroeconomics; quickly recover so that the Vietnamese economy can catch up with the world’s growth momentum; ensure economic recovery in parallel with social security. Additionally, the project is not only oriented to the public sector, specifically the public investment, but also had an impact on the private sector (domestic and foreign enterprises) that are entitled to the monetary and fiscal policies currency for sufficient resources to revive and progress. DM Phuong informed that the project is to recover and develop the country’s economy in a long term by 2030, with the attempt to achieve the goals of the 5-year socio-economic development plan for the 2021-2025 period and the 10-year socio-economic development strategy for the 2021-2030 period.

On the update of solution groups for socio-economic recovery and development in parallel with the improvement of the economy’s internal capacity and autonomy, DM Tran Quoc Phuong emphasized five critical solution groups. Firstly, economic reopening in parellel with COVID-19 prevention and control: increase budget for vaccine purchase and improvement in medical capacity for all levels.

Secondly, ensure of social security and harmonious combination of financial and monetary solutions. In particular, utilize fiscal solution to support people on the priority list, for instance, those who suffered severe losses due to COVID-19, or low-income earners; as well as monetary solution to make more preferential resources available for vocational capacity improvement and low-income students and households.

Thirdly, recovery support for businesses, cooperatives and business households. Appropriate fiscal, monetary and other policies should also be created to remove difficulties for enterprises to promptly recover and go into operations, production and business, and have access to resources and capital.

Fourthly, public investment stimulus, and acceleration in public investment capital disbursement to mobilize non-state investment resources.

Fifthly, risk control and ensure of inflation stability. The focuses are controlling inflation, ensuring major balances of the economy and stabilizing the macroeconomics.

Photo: MPI

According to DM Tran Quoc Phuong, the socio-economic recovery and development program is complementary, and closely connected with the socio-economic development, finance, and economic restructuring plans in 5 years. It is to both soon bring the economy back to a growth trajectory and make the economy more developed to meet the objectives of the 10-year socio-economic development strategy for the 2021-2030 period.

Mission Chief Era Dabla-Norris expressed her gratitude towards DM Phuong for the information and recommendations of the MPI. She said that Vietnam had achieved excellent results even during the COVID-19 pandemic, and the country needed to continue to stabilizing the macroeconomics and creating conditions for inclusive growth.

DM Tran Quoc Phuong highly appreciated the comments of the IMF Working Group and hoped to continue to receive close coordination in the coming time. The MPI welcomes the IMF Working Group’s recommendations to provide more effective policies in the future./.

Bao Linh
Ministry of Planning and Investment

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