Vietnam’s National Assembly on January 11 approved a resolution on a socio-economic recovery program worth nearly VND350 trillion (US$15.4 billion).

Overview of the NA session. Source: quochoi.vn

The program, scheduled to take place during the 2022-2023 period, would include an economic reopening initiative along with improvements in preventive healthcare capabilities worth VND60 trillion ($2.64 billion); social welfare, and job creation support (VND53.15 trillion or $2.34 billion); businesses, cooperative and households recovery support (VND110 trillion or $4.84 billion); infrastructure development  (VND113.85 trillion or $5 billion); administrative reform and improvements of the business environment.

At the discussion session, NA Chairman Vuong Dinh Hue said the recovery program is intended to ensure Vietnam’s average GDP growth at 6.5-7% during the 2021-2025 period, inflation rate staying below 4%, and stable macro fundamentals.

Meanwhile, fiscal support under the program would include a 2% cut in value-added tax (VAT) in 2022 for goods and services subject to 10% VAT, except for those in fields of telecommunications, insurance, banking, and mining.

Hue expected the monetary policy to be managed in a flexible manner with a view to further lowering lending rates by a minimum of 0.5-1 percentage points within two years; restructuring debt payment schedules and freezing, waiving interest rates for customers affected by the pandemic.

NA deputies votes for the ratification of the resolution.

To finance the recovery program, the NA has allowed a higher state budget deficit during 2022-2023 by an average of 1-1.2 % of the GDP, or a maximum of VND240 trillion ($10.6 billion).

In this case, Vietnam’s state budget deficit in 2022 is expected to increase by 1.1% of the GDP, or VND102.8 trillion ($4.5 billion) higher than the previous estimate.

The NA called for the Government to continue keeping a stable macro-economic situation and ensuring major balances of the economy while taking measures to prevent tax losses or transfer pricing to add more resources to the economic recovery efforts.

“The issuance of the Government bonds should be in close association with the management of the monetary and fiscal policies,” said the resolution.

Vietnam is set to keep an average GDP growth of 6.5-7% in the five-year period, or a GDP per capita of $4,700-5,000 by 2025.

Manufacturing and processing, the key drivers for growth, is set to make up 25% of the GDP, and the digital economy would represent 20%.

The plan also targets an average productivity growth of 6.5% per year and a budget deficit of 3.7% of the GDP for the five-year period.