How will Vietnam's new bailout packages be disbursed?

Dr. Dinh The Hien, Economist

The above decision of Politburo is made as per its Conclusion 07 dated June 11, 2021 on some key tasks to step up the fight against the COVID-19 epidemic and socio-economic development.

- Learning the previous bailout packages, in your opinion, in the current context, what should be noted first when studying and implementing new support packages?

Vietnam has different economic conditions than many other countries. For example, right now, we cannot apply the same stimulus measures as the U.S, U.K, or more recently, Japan and Singapore...

Regardless of the context, the bailout goal will be the same, the key points for building a support package will be somewhat similar. For example, looking back at the 2007-2008 global financial crisis, the U.S government identified the automobile as a priority sector. They do not support businesses but give money to people – whoever buys a car will be supported by the Government with $1,000. Like the present when the pandemic broke out, the U.S unemployment rate edged up unprecedentedly, along with many solutions, the U.S Government has supported spending on shopping for necessities as a result of boosting consumer demand.

Therefore, I think that choosing key sectors and subjects with high spillover is the most important when building new stimulus packages in Vietnam.

- How should new bailout packages be implemented, sir?

Top priority should be paid to those who are unemployed or affected by the COVID-19 pandemic by supporting them to borrow money to buy essential foods. It is free for them to shop, not to impose their shopping at "national brand enterprises" or State-owned enterprises. That is, just giving a loan to the people, creating demand, through which businesses could speed up production and business activities, good and affordable products will be chosen by people. Thereby, businesses will have good cash flow when they sell goods. This way does not damage the market mechanism.

- Why is it "loans" and not "helicopter money"? And how will new bailout packages be disbursed, sir?

First, bailout in the form of loans will avoid both inflationary and budgetary pressures. Second, borrowers will be responsible for their loans, they don't receive money and spend it for improper purposes. Third, the lending mechanism should be approved on the list of unemployed people with accurate certification. The loans should depend on the borrower's ability to pay VND 10 to 100 million/loan, with 0% interest rate, monthly disbursement, 2-year repayment term. In parallel, it is combined with other fiscal and monetary stimulus packages for those who are on priority lists.