Monetary and fiscal policy aimed at stabilizing and recovering the economy
- QTH-3Q19 Nguyen Thi Nhung
- Dec 26, 2019
- 8 min read
Updated: Mar 28, 2022
In 2021, with unprecedented new difficulties and challenges, in the face of complicated developments of the Covid-19 epidemic, our Party and State have had many timely policies to direct economic development, production and business. , realizing the dual goal of "repelling the epidemic and developing the economy", adapting safely, flexibly, and effectively controlling the epidemic.
Monetary policy management works closely with fiscal policy and other macro policies to ensure inflation control, macroeconomic stability and money market, and support the recovery of economic growth. Monetary policy tools are operated synchronously to regulate liquidity appropriately. Stable money market; Interbank interest rates remained low, supporting credit institutions (CIs) to reduce capital costs in order to be able to continue cutting lending rates. Managing interest rates in line with macroeconomic, inflation and money market developments, supporting economic recovery. The State Bank kept the operating interest rates unchanged, creating favorable conditions for credit institutions to access capital from the State Bank at low cost; continue to direct credit institutions to proactively balance their financial capacity, thoroughly reduce operating costs, and focus all resources to reduce lending interest rates. In addition, 16 commercial banks (accounting for 75% of the total outstanding loans of the economy) have effectively reduced lending interest rates as committed with the Banking Association. Actively and flexibly manage exchange rates, in line with domestic and foreign market movements, macro balances, currency and monetary policy objectives. Market liquidity is smooth, legal foreign currency needs are fully and promptly met.
Operating appropriate credit solutions, ensuring capital supply for the economy, focusing on production - business, priority areas, creating favorable conditions in accessing credit capital. The State Bank continues to implement solutions to control credit scale, associated with improving credit quality; at the same time, direct credit institutions to grow credit safely and effectively, focus credit on production areas and priority fields according to the Government's policy; strictly control credit in potentially risky fields such as real estate, securities, BOT projects, BT traffic; strengthen risk management for loans to serve life needs and consumer credit; create favorable conditions for businesses and people to access bank credit capital.
Continuing to implement solutions on exemption and reduction of payment service fees to support people and businesses to overcome difficulties caused by the Covid-19 epidemic. It is estimated that the number of free transactions accounts for about 80%. It is expected that the total amount of payment service fees through the interbank electronic payment system and through the clearing switch system (Napas system) will be reduced for customers from 2020 to the end of 2021 by about VND 2,557 billion and reduce over VND 250 billion in credit information services in 2021.
Simultaneously, the State Bank has organized programs to connect banks - businesses in localities across the country, especially at times when social distancing is not implemented, in order to identify difficulties and obstacles of businesses. businesses, thereby taking appropriate solutions to create favorable conditions for businesses in credit relations with banks.
In addition to professional work, social security activities are always focused, since the beginning of the year, the banking industry has spent more than 5,000 billion VND to support the implementation of social security activities nationwide. . Particularly for the prevention and control of Covid-19, the banking industry has supported more than 3,500 billion VND with many meaningful programs in response to the call of the Party and State leaders such as: Support the Foundation for prevention and control of vaccines. The government has more than 700 billion VND, donated 250 billion VND for the program "Waves and computers for you"...
Direction and tasks of banking activities in 2022
Based on the goals of the National Assembly and the Government on the Socio-Economic Development Plan in 2022, continuing to closely follow the macroeconomic and monetary developments, the SBV continues to operate proactively, flexibly, and synchronously. monetary policy tools, closely coordinate with fiscal policy and other macroeconomic policies to control inflation, contribute to macroeconomic stability, support economic growth recovery, adapt timely with market developments at home and abroad. Specifically:
Managing interest rates in line with macro balance, inflation, market movements and monetary policy objectives; encourage credit institutions to continue to reduce costs to strive to reduce lending interest rates, creating conditions to reduce capital costs for people, businesses and the economy.
Actively and flexibly manage the exchange rate in accordance with the situation of domestic and foreign markets, macro balances, currency and monetary policy objectives; contribute to controlling inflation and stabilizing the macro-economy.
Administering credit solutions to contribute to controlling inflation and supporting economic growth recovery. Directing credit institutions to safely and effectively increase credit growth, control and handle bad debts; directing credit to production and priority fields according to the Government's policy; strictly control credit in potentially risky areas. Continue to implement synchronously solutions to support people to access bank credit and solutions to remove difficulties for customers affected by the Covid-19 epidemic, natural disasters and epidemics.
Implement the Project on restructuring credit institutions associated with bad debt settlement in the period of 2021 -2025 after being approved.
Promote digital transformation, promote the CTM in banking activities and ensure security and safety in payment activities. Focus on implementing the project of developing commercial centers in the period of 2021 - 2025; Strategy on development of Vietnam's payment system to 2025 and orientation to 2030; New Decree on CTM and Decree on controlled testing mechanism of financial technology (Fintech) activities in the banking sector; Implement the Plan on digital transformation of the banking sector up to 2025, with orientation to 2030; Coordinate with ministries and sectors to pilot the use of telecommunications accounts to pay for goods and services of small value (Mobile-Money)...
The goal of the policy is to restore and rapidly develop production and business activities, promote growth drivers, prioritize a number of important industries and fields, and strive to achieve the goals of the 2021-2025 period. : average GDP growth 6.5 - 7%/year, public debt target below the warning level allowed by the National Assembly in Resolution No. 23/2021/QH15, unemployment rate in urban areas below 4%; maintaining macroeconomic stability, ensuring major balances in the medium and long term.
Reduce costs, support cash flow, ensure initiative, create favorable conditions for businesses, economic organizations and people; effective prevention and control of COVID-19; ensuring social security and people's lives, especially the workers, the poor, the vulnerable, those heavily affected by the epidemic; ensuring national defense, security, social order and safety.
Regarding policies to support the program of socio-economic recovery and development, the National Assembly decided to reduce the value-added tax rate by 2% in 2022, applicable to groups of goods and services being applied. value-added tax rate of 10% (remaining to 8%), except for a number of groups of goods and services as follows: telecommunications, information technology, financial activities, banking, securities, insurance, business trading in real estate, metals, prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products, taxable goods and services Special Consumption.
Allowed to be included in deductible expenses when determining corporate income taxable income for support and sponsorship expenses of enterprises and organizations for COVID-19 prevention and control activities in Vietnam for the period. tax year 2022.
Increase spending on development investment from the state budget to a maximum of VND 176 trillion, concentrated in 2022 and 2023, including: Allocating a maximum of VND 14 trillion to invest in new construction, renovation and upgrading , modernize the grassroots health system, preventive medicine, regional disease control centers, improve the disease prevention and control capacity of hospitals and central hospitals in association with training and quality improvement. quantity of human resources in the field of health, domestic production of vaccines and drugs to treat COVID-19; grant the Bank for Social Policy a maximum of 5 trillion dong, including interest compensation and management fee of 2 trillion dong to implement the program's preferential lending policy; maximum interest rate support of 3 trillion dong for borrowers under policy credit programs with current lending interest rates above 6%/year; invest in new construction, renovation, upgrading, expansion and modernization of social assistance, training, vocational training and job creation establishments, up to VND 3.15 trillion.
In addition, interest rate support (2%/year) up to VND 40 trillion through the system of commercial banks for a number of important industries and fields, enterprises, cooperatives, and business households. have the ability to repay debts, have the ability to recover; loans to renovate old apartments, build social houses, houses for workers to buy, rent and hire-purchase; provide charter capital for the Tourism Development Support Fund up to 300 billion VND; maximum additional 113.55 trillion dong of investment capital from the state budget for infrastructure development: traffic, information technology, digital transformation, prevention and control of riverbank and coastal erosion, conservation ensure the safety of water reservoirs, adapt to climate change, and overcome the consequences of natural disasters.
Regarding monetary policy, synchronously and flexibly administer monetary policy tools to contribute to maintaining macroeconomic stability, controlling inflation, ensuring safety of the credit institution system, and supporting active support for socio-economic recovery and development; research to stabilize the maximum ratio of short-term capital for medium and long-term loans, reasonably calculate the required reserve ratio, perform open market operations, refinance, and direct credit institutions continue to reduce operating costs to strive to reduce lending interest rates by about 0.5% - 1% in 2 years 2022 and 2023, especially for priority sectors.
According to the Law on SBV 2010, the Governor of the State Bank of Vietnam decides on the use of tools to implement the national monetary policy, including refinancing, interest rates, exchange rates, required reserves, open market operations and tools. , other measures as prescribed by the Government.
Refinancing: Refinancing is a form of credit granting by the State Bank to provide short-term capital and means of payment to credit institutions. The State Bank stipulates and implements the refinancing of credit institutions in the form of loans secured by pledging valuable papers; discount valuable papers; other forms of refinancing.
Interest rate: The State Bank announces the refinancing interest rate, basic interest rate and other interest rates to operate monetary policy and combat usury. In case the money market has abnormal movements, the State Bank shall prescribe the interest rate management mechanism applied in the relationship between credit institutions with each other, with customers, and other credit relationships. (See Table of interest rates of SBV).
Exchange rate: The exchange rate of Vietnam dong is formed on the basis of supply and demand of foreign currency in the market regulated by the State. The State Bank shall announce the exchange rate, decide on the exchange rate regime, and the exchange rate management mechanism. (See Table of central exchange rates of the State Bank of Vietnam).
Required reserve: Required reserve is the amount of money that credit institutions must deposit at the State Bank to implement national monetary policy. The State Bank stipulates the required reserve ratio for each type of credit institution and each type of deposit at the credit institution in order to implement the national monetary policy. The State Bank stipulates the payment of interest on compulsory reserve deposits and deposits exceeding the compulsory reserve of each type of credit institution for each type of deposit. (See Table of required reserve ratios of the State Bank).
Open market operations: The State Bank performs open market operations through the purchase and sale of valuable papers to credit institutions; stipulate the types of valuable papers allowed to be traded through open market operations.
Reasonable monetary regulation, closely coordinating with fiscal policy, creating favorable conditions for the issuance of Government bonds and for credit institutions to continue investing in Government bonds; maximum use of 46 trillion VND from other legal financial sources to import vaccines, therapeutic drugs and medical equipment and supplies for COVID-19 prevention and control in case of necessity.
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