Fiscal policy achieves many positive results

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Fiscal policy is expanded and flexible to promote economic growth 2024Fiscal policy is expanded and flexible to promote economic growth 2024
Maintain fiscal policy to Maintain fiscal policy to “open the way” for the economy in 2024
Fiscal policy achieves many positive results
Associate Professor, PhD. Tran Hoang Ngan

Deputy Prime Minister Le Minh Khai: The Government has flexibly and effectively supported people and businesses

The Government continues to exempt and reduce taxes, fees, charges, and land use fees to remove difficulties for production and business activities and improve people and businesses’ access to credit.

Implementing the solution, the total support scale for 2020-2023 is about VND700,000 billion. In the first six years of 2024, the Government submitted and the National Assembly approved the policy of reducing taxes. In the second half of the year, the Government has submitted to the National Assembly for consideration and permission to reduce VAT rate by 2%. If the policy is approved, about VND 24,000 billion of VAT rate will be reduced in 2024, the total support scale of taxes, fees, charges and land use fees will be about VND190,000 billion, including VND92,000 billion of extended amount and VND 98,000 billion of reduced amount.

Moreover, during the implementation, realizing that the effectiveness of the 2% interest rate support package was not high, in 2023, the Government submitted to the National Assembly permission to exempt, reduce, and extend the deadline for paying taxes, fees, and charges. fees, land rent…, and the total scale of support reached about VND200,000 billion. This confirms that the Government has flexibly and effectively used the resources allowed by the National Assembly to support people and businesses.

(Synopsis of statements at the socio-economic discussion session under the 7th Session, 15th National Assembly on May 29).

How do you evaluate the role of fiscal policy in the recent economic context?

The world’s economic and political context changes very quickly, complexly, and unpredictably with many uncertainties, requiring flexible adaptation. In the country, the number of businesses withdrawing from the market increases year by year. Therefore, support policies need to be implemented promptly and comprehensively to support businesses and the economy.

Notably, over the past time, despite certain difficulties, the State budget still ensures revenues to ensure key expenditures such as recurrent expenditure, development investment expenditure, expenditure for stimulating consumption, expenditure for implementing Resolution 43/2022/QH15 on fiscal and monetary policies to support the socio-economic recovery and development program issued by the National Assembly. The public debt reduced from 43%/GDP in 2021 to 37%/GDP in 2024. Therefore, in recent discussion sessions, many National Assembly delegates have paid attention to this factor to recommend the Government to continue to implement expansionary fiscal policy to support people and businesses.

In fact, the fiscal policy has achieved many positive results. For workers, the salary reform policy and support policies for the Bank for Social Policies to expand loans to vulnerable groups will take effect from July 1. The work has been implemented successfully under Resolution 43, the Government bond guarantee budget to support social security. In public spending, development investment spending always prioritizes resources for developing social housing and housing for workers. For businesses, fiscal policy has implemented tax exemptions, fees, land rent and reduced Value Added Tax from 10% to 8% for some items.

In your opinion, what solutions need to be implemented to continue supporting the economy’s recovery and growth?

Along with fiscal policy and monetary policy, banks need to support green transformation for businesses. The climate change is becoming increasingly severe, and the top criteria for importing goods into international markets is to prioritize green economy and green businesses. Vietnam’s exports will certainly be affected by the green transition. However, if enterprises want to implement the green transition, they need to meet requirements on certain resources for waste treatment, reducing greenhouse gases, using clean energy and raw materials… Therefore, businesses need support in terms of credit policies as well as taxes and fees for appropriate green transition.

What are the fundamental solutions to create motivation to support the economy?

With unpredictable economic fluctuations and rapid transitions, the time factor for policy decisions needs to be considered. If we do not promote decentralization to help promote the initiative and creativity of localities, we will not be able to adapt. Institutions need to change in such a direction, because the Party’s instructions also require promoting decentralization, so in the Prime Minister’s instructions, the Government regularly raises this issue. For example, the slow disbursement of public investment capital leads to capital adjustments, and this issue is discussed many time due to regulations on process, procedures and time, while prices of raw material, petroleum products, iron and steel change continuously. Therefore, in the context of a rapidly changing and unpredictable world, policy decisions must be made faster and decentralization is required to meet the characteristics of the world economy.

Issues related to political conflicts, competition between major countries, trade protection… also affect the supply chain, leading to the possibility of disruptions as in the Covid-19 pandemic. As a country that relies heavily on import and export, Vietnam’s economy will be greatly affected. Therefore, competent authorities need to implement solutions to encourage people to prioritize using Vietnamese products. People’s income is improving, Vietnam has surpassed the low-middle income level to become an upper-middle income country by 2030, the production of businesses must transform to meet domestic consumer demand. Furthermore, our country’s exports should be directed to closer markets such as ASEAN, India, China…

In addition, it is also necessary to implement policies to attract foreign investment in high-tech, environmentally friendly fields and connect with domestic businesses. With the continuous development of technology 4.0, Vietnam faces challenges but also gets opportunities, so it needs a mechanism to attract high-quality human resources and talents to the country. The upcoming salary reform policy should have appropriate incentives for intellectuals, scientists, and teachers… In general, we will depend on market fluctuations to provide appropriate solutions.

Thank you Sir!

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