Fiscal, monetary policies should be combined harmoniously: PM

Prime Minister Phạm Minh Chính on Thursday urged the financial sector to harmoniously combine fiscal and monetary policies, and better the State budget management work in 2022.

The State budget must be spent economically and effectively, he told a national conference held online by the Ministry of Finance (MoF), stressing the need to cut unnecessary expenses and ensure resources for important tasks, especially the COVID-19 prevention and control.

The Government leader also asked the sector to push ahead with the disbursement of public investments to boost economic recovery and growth.

He reviewed significant achievements Việt Nam recorded last year with State budget collection topping VNĐ1.56 quadrillion, surpassing the estimate by 16.4 per cent, and budget overspending below 4 per cent, even lower than the figure estimated by the National Assembly.

The treasury reported the budget collection during 2021 was a 3.7 per cent higher than the previous year's with a large bulk coming from sales of crude oil, export activities and land-use fees. Collection by both central and local governments was said to be higher than the projected figures at 106.7 per cent and 128.2 per cent, respectively. 

The State budget covered a number of large expenses during 2021 to acquire COVID-19 vaccines, support frontline workers and build up the country's medical infrastructure. By the ministry's estimate, the Government waived nearly VNĐ136.8 quadrillion in land-use fees and other taxes for businesses and business households on top of VNĐ38 quadrillion on social welfare and assistance for people who suffered income loss during the pandemic. 

Meanwhile, a significant amount of funds was saved by cutting back on non-essential conferences and events, as well as overseas trips for government officials. The treasury recalled funds for non-immediate uses by central and local government to shore up COVID-19 prevention and control, as well as vaccine purchase funds.

A total of VNĐ74 quadrillion was allocated to pandemic control projects and to support the population on top of more than 140,000 tonnes of rice distributed to 33 localities that were hit the hardest by the pandemic. 

Disbursement for development investment showed signs of slowing down during 2021. By the end of the year, the disbursement rate was reported to be just 74.7 per cent of the annual target. 

Finance minister Hồ Đức Phớc said his ministry is to continue support for affected households and businesses during 2022 while introducing stimulus packages to speed up economic recovery. In addition, the ministry is to reach out to unofficial economic activities and digital commerce to prevent losses to the State budget as well as to collect unpaid duties from previous years. 

As the COVID-19 pandemic is predicted to linger and affect the State budget revenue as well as spending on the pandemic combat, it is necessary to flexibly combine fiscal and monetary policies to keep macro-economic stability, said Minister Phớc.

Talking to the Vietnam News Agency, Phớc said the MoF suggested the Government propose the National Assembly allocate VNĐ10 trillion (over $439 million) in the health sector’s frequent expenditure from the 2022 central budget for COVID-19 prevention and control.

The MoF will base on the pandemic situation to use those resources from the central budget and combine them with legal financial sources of localities to meet demand in reality, the minister said.

He noted that to achieve the twin targets of combating the pandemic and developing the economy, closely combining fiscal and monetary policies is all the more important so as to guarantee resources for the COVID-19 fight and social security, and cut down input costs for production and business activities.

Regarding fiscal policies, relevant agencies have exempted, reduced, or extended repayment deadlines of tax, fee, land rent, and others in order to help enterprises, households, and individuals doing business minimise expenses and sustain activities.

Many monetary and credit solutions have also been carried out such as reducing lending interest rates and providing concessional loans to help businesses pay salary to workers, channeling credit into priority fields, and strictly controlling credit for high-risk sectors.

In addition, some fiscal policies have been implemented to give cash assistance to workers and provide indirect aid for employers, Phớc went on.

Apart from the restructuring of the State budget and public debt, appropriate monetary and foreign exchange rate policies have helped develop the Government bond market, thus mobilising considerable resources for the State budget, according to the official.

Public debt

The ministry reported public debt for the year to reach 43.7 per cent GDP with Government debt accounting for 39.5 per cent, well under the 65 per cent debt ceiling allowed by the National Assembly. 

The country signed 12 new loans worth a total of $958 million and has been in technical talks for another 11 for an additional $924 million. The ministry has also been in talks to renegotiate 22 other loan agreements.

In 2021, the ministry disbursed over VNĐ13.79 quadrillion. Of which, VNĐ8.23 quadrillion went to localities and VNĐ5.55 quadrillion to central Government agencies. 

Deputy minister of finance Trần Xuân Hà said the ministry's top priority for 2022 is the effective management of foreign loans including ODA funds. Hà said special attention will be given to loans with strings attached such as provisions on tender and tax exceptions.