Economic support package needs to be implemented quickly and effectively

The 2% interest rate support program should be encouraged for new loans that are able to help businesses recover. Photo: Thu Diu.

The support package is being disbursed step by step, but a number of support policies have been immediately put into practice. However, this is the largest scale support program ever, for all fields, in two years, so the workload is huge.

Assessing the implementation of the support package, Mr. Can Van Luc, a member of the National Financial - Monetary Policy Advisory Council, said that in a positive scenario, the support package is fully disbursed in two years, Vietnam will achieve 6 - 6.5% growth in 2022 and the next year is higher, reaching about 7%. In the more negative scenario, the disbursement rate will reach about 70%, the economic growth will only reach 5 - 5.5% in 2022 and 6% in 2023.

"It is important that the Government soon issue a prevention and control program to update Resolution 126 in a more systematic and consistent manner, with a focus on improving medical capacity. Currently, many public - private hospitals have huge problems with medical equipment, including medicines. Along with that, Vietnam also needs to pay attention to the global geopolitical context, the rising prices of goods such as gasoline and oil, the coordination of fiscal and monetary policies to control inflation and the consequences in the process of recovery. In addition, this is also a golden opportunity to accelerate institutional reform, especially in the investment and business environment to attract domestic and foreign investment, when many foreign investors are interested in Vietnam," Can Van Luc said.

Many flexible mechanisms and policies have been promulgated by the National Assembly and the Government in order to quickly and effectively disburse the support package. The task of the ministries, branches and localities is to ensure that projects are implemented soon, bringing positive spillover effects to the economy.

Recently, the State Bank of Vietnam had a meeting to discuss the development of a draft decree guiding the process of supporting the interest rate of 2%/year, up to a maximum of VND40,000 billion and aiming to submit this draft in March.

Accordingly, cooperative enterprises, business households, businesses in industries heavily affected by the Covid-19 pandemic such as aviation, tourism, agricultural production are able to pay the debt as well as will be the main beneficiaries of this compensation policy. It is estimated that about VND1 quadrillion of loan capital will be pumped into the economy. And it is expected that the interest rate compensation package will be provided through both private commercial banks, not just the four large state-owned banks.

Can Van Luc said that with this 2% interest rate compensation package, new loans should be encouraged because old loans have basically been deferred and partially reduced in interest according to previous support programs.

Therefore, it is necessary to encourage this 2% interest rate support program for new loans that are able to help businesses recover.

Five solutions

Proposing solutions to effectively implement this support package, Dr. Vu Tien Loc, a member of the National Assembly's Economic Committee, said that the solutions in the economic recovery and development program provided by the Government will be more effective when there are specific and timely fiscal policies.

According to Vu Tien Loc, there will be five important solutions in the program of economic recovery and development. Firstly, opening up in the broadest sense, culminating in the opening of the international economy, reopening international flight routes, with no restrictions on the frequency of operations by airlines as long as there is market demand. Second, ensure social security and paying attention to the vulnerable before economic fluctuations. Third, maintain livelihoods by implementing solutions to support businesses, cooperatives and business households to have the motivation to recover the economy. Fourth, upgrade infrastructure through promoting a series of public investment projects to promote short-term growth and create momentum for long-term development. Fifth is institutional strengthening.

“The support package of VND350,000 billion is the activator for the above five solutions. It is important to implement transparent and effective solutions in the spirit of considering the monetary and fiscal support package as the greatest measure to create the beginning of a breakthrough phase of the economy," said Vu Tien Loc.

Notably, experts also said that the support package should not be considered an alternative solution, but only as a primer for the locality to mobilize other resources.

"Locals can completely use this capital to invest in the most entangled stages, it is a bottleneck that we cannot clear, then we must put this capital in. If the site clearance is clean, investors can be called in very easily, people can even bid on that land to create resources and even push PPP public investment cooperation," Prof. Dr. Hoang Van Cuong, Vice Rector of National Economics University, said.