Unify awareness and effectively implement of fiscal policies to ensure socio-economic recovery and development
Communist Review - Fiscal policy is an important tool in managing the State's economic policy, which has a great influence on the macroeconomic balance of the economy as well as supports the promotion of sustainable economic growth. Therefore, unity in awareness and effective implementation of fiscal policy is an important measure, which works together with monetary policy and other economic policies to ensure socio-economic recovery and development in the coming time.
The concrete foundation for socio-economic recovery and development is associated with disease control
At the end of the 5-year plan (2016 - 2020), despite being heavily affected by the COVID-19 pandemic in the last year of the plan period, our country's economy still maintained a fairly high average growth rate (about 5.9%); the size and level of the economy were raised, the quality of growth was improved, the major balances of the economy were ensured, inflation was controlled at a low level; people's lives have improved markedly both materially and spiritually; the country's position in the region and in the international arena has been enhanced.
In the field of finance - state budget, the size and sustainability of the state budget continues to improve. Average budget revenue reached 25.2% of GDP, up 1.6 times compared to the period 2011 - 2015; the rate of revenue from taxes and fees is approximately 21% of GDP; the proportion of domestic revenue in the total state budget reached 85.6% by 2020, nearly 26% higher compared to the previous 10 years. The average state budget expenditure reached approximately 28% of GDP; the spending structure shifted positively; the proportion of development investment expenditure reached about 28%; recurrent expenditure decreased to less than 64% of the total state budget expenditure. Fiscal space was reinforced; the resilience of the state budget was strengthened; the average state budget deficit for the whole period was 3.45% of GDP, lower than the target (less than 3.9% of GDP); public debt decreased sharply from 63.7% of GDP at the end of 2016 to 55.2% of GDP at the end of 2020 and was restructured in a more sustainable way (domestic mobilization is mainly, extending debt maturities, reducing deposit rates, etc.) As a result, sufficient resources has been ensured to handle urgent problems, especially in response to the COVID-19 pandemic.
However, the COVID-19 pandemic has seriously impacted the world economy and Vietnam. In 2 years 2020 - 2021, Vietnam's economic growth continuously decreased to a low level(1); the resource space of the whole state sector, businesses and people was reduced, many potential challenges in macro stability, inflation, etc. affected the ability to implement socio-economic development goals, targets and tasks annually and in the period of 2021 - 2025.
The Resolution of the 13th Congress of the Party has identified "socio-economic recovery and development" as one of the key tasks of the 13th Congress term, in which the goal set for the 5-year plan (2021 - 2025) is: quickly restoring the economy in the early years (2021 - 2022), effectively taking advantage of new opportunities for breakthroughs and development of the country in the last years (2023 - 2025), striving for average economic growth (GDP) in the whole period of about 6.5% - 7% per year.
To support people and businesses to overcome difficulties and respond to the COVID-19 pandemic, many economic, financial and monetary solutions and policies, such as policies to support people and employees according to Resolution No. 42/NQ-CP, Resolution No. 68/NQ-CP of the Government; exemption, reduction and extension of taxes, fees and charges according to Resolution No. 406/NQ-UBTVQH15 of the Standing Committee of the National Assembly, Decree No. 52/2021/ND-CP, of the Government; general policies on promoting growth, supporting enterprises, cooperatives and business households according to Resolution No. 105/NQ-CP, Resolution No. 63/NQ-CP of the Government, etc. are promptly, synchronously and drastically promulgated and implemented, focusing on industries, fields and people heavily affected by the epidemic, integrating and promoting a number of priority sectors and fields. These policies have made important contributions to macroeconomic stability, ensuring social security and minimizing the impacts of epidemics, population security and social stability. This is an important foundation for the process of recovery and socio-economic development associated with disease control.
However, in the face of difficulties and far-reaching impacts of the epidemic, it is necessary to devise coherent solutions and policies to quickly support the economy to recover and develop in order not to fall behind the region and the world. Therefore, the development of the Socio-Economic Recovery and Development Program, along with a package of fiscal and monetary solutions to support the Program is urgent and necessary.
Implementing the conclusions of the Central Committee and the Politburo(2); resolutions of the National Assembly(3), the Government has directed the development and submission to the Politburo for consideration and authorization for the implementation of the Program on socio-economic recovery and development(4); submitting to the National Assembly for approval Resolution No. 43/2022/QH15, on January 11, 2022, "On fiscal and monetary policies to support the socio-economic recovery and development program" in order for the economy to overcome difficulties, not to lag behind the global economic recovery, and at the same time to create a foundation and favorable conditions for socio-economic development for both the period of 2021 - 2025 and the following years and improve efficiency, labor productivity, competitiveness, internal capacity and autonomy of the economy in the future. On that basis, the Government has issued Resolution No. 11/NQ-CP, dated January 30, 2022 on the "Socio-economic recovery and development program and the implementation of Resolution No. 43/2022/QH15 of the National Assembly on fiscal and monetary policies to support the Program", in which the fiscal policy scale accounts for 83% of the total support package and is considered to be the "key" to successful implementation of the Program.
The socio-economic recovery and development program is formulated with the following key views: 1- Sticking to the Party's guidelines and orientations, the National Assembly's resolutions, maintaining macro-economic stability, improving productivity, quality, efficiency and competitiveness, autonomy, resilience and adaptation of the economy, timely meeting immediate and long-term socio-economic development requirements, closely linked to 5-year and annual programs and plans(5); 2- Flexibly managing, tightly, effectively and harmoniously coordinating the fiscal, monetary and other macro policies; strictly controlling inflation, ensuring large balances of the economy; increasing budget overspending only to increase development investment expenditures and ensure state budget balance when implementing tax exemption and reduction solutions; 3- The scale and resources of the program are large enough; having a central goal, focusing on breakthroughs in the construction of special infrastructure, roads and social security, the right people need support to solve urgent problems, avoid spreading and wasting resources; 4- Supporting policies and solutions must be feasible, implemented immediately, promptly and effectively, mainly in 2 years (2022 - 2023); some policies may extend and supplement resources depending on the course of the epidemic; 5- Mobilizing, allocating, managing and effectively using resources; reasonably balancing between regions, areas, localities, fields and priority subjects; easily implementing, checking, monitoring and evaluating; combating negativity, corruption, group interests, policy profiteering; ensuring efficiency, fairness, openness and transparency.
The objectives of the Program are to recover and quickly develop production and business activities, striving to achieve the goals of the period 2021 - 2025: average GDP growth of 6.5 - 7% / year, public debt below the level allowed by the National Assembly in Resolution No. 23/2021/QH15, maintaining macroeconomic stability, ensuring large balances in the medium and long term. The program also aims to reduce costs, support cash flow, ensure initiative, create favorable conditions for businesses, economic organizations and people; effectively prevent and control of the COVID-19 pandemic and ensure social security and people's lives, especially workers, the poor, the vulnerable, those heavily affected by the epidemic as well as national defense, security, social order and safety.
The program identifies 5 tasks and key solutions: 1- Opening the economy associated with investment in health capacity building and disease prevention; 2- Ensuring social security and employment support, such as supporting 3 month rent for employees, effectively implementing preferential Bank lending policies for Social Policies; 3- Supporting the recovery of enterprises, cooperatives and family businesses through exemption and reduction of taxes, fees and charges payable, extension of the time limit for payment of taxes and land rent included in deductible expenses when determining income subject to corporate income tax for expenditures supporting and financing COVID-19 pandemic prevention and control activities for the 2022 tax period; supporting lending interest rate of 2% per year focusing on a number of important industries and fields; 4- Investing in infrastructure development, allocating capital to important and urgent projects with great spillover impacts, being capable of rapid disbursement and immediate absorption into the economy; 5- Institutional reform, administrative reform, improvement in investment and business environment.
Key fiscal policy solutions of the Socio-Economic Recovery and Development Program
Firstly, in the overall Program, the value of fiscal policy solutions is estimated at VND 291 trillion (equal to about 83% of the total support package) and quite comprehensive, from the collection policy, such as reducing taxes, fees and charges up to about VND 64 trillion, continuing to extend the tax payment deadline, land rent with a support level of about VND 6 trillion; spending policies such as investment in infrastructure development, modernization of the health system, granting interest rate compensation, maximum interest rate support of about VND 176 trillion, rent support for employees about VND 6.6 trillion; At the same time, increasing the Government guarantee limit for domestically issued bonds to the Bank for Social Policy to a maximum of VND 38.4 trillion.
The total demand for resources for the implementation of the Program is up to VND 240 trillion, corresponding to an increase in state budget deficit of 1-1.2% of GDP /year compared to the current level (about 3.7-3.8% of GDP); on the basis of making the most of available resources, such as revenue increase and expenditure savings of the central budget; effective use of resources in the medium-term plan ( finance and public investment) in the period of 2021 - 2025; saving, minimizing expenditures, flexibly adjusting between tasks and expenditure items within the scope of competence; mobilizing domestic government bonds, ODA loans and foreign incentives in the form of budget balance support; mobilizing other legal sources of finance.
The aforementioned calculated level of overspending is determined on the assumption that other macro factors are stable. Accordingly, public debt by the end of 2025 is estimated at 49-50% of GDP, government debt 45-46% of GDP, below the warning threshold and lower than the ceiling allowed by the National Assembly in Resolution No. 23/2021/QH15(6). In fact, the Program will positively affect economic growth, thereby positively affecting state budget revenues, along with strict budget management and thoroughly saving recurrent expenditures and reduce pressure to increase state budget overspending.
Secondly, the implementation of fiscal policy solutions is expected to positively affect economic growth, improve the investment and business environment as well as the internal capacity and overall competitiveness of the economy, in particular:
According to the calculations, in case of failure to implement fiscal and monetary policy solutions, the average economic growth in the period of 2021-2025 will reach only 5.4% per year, which does not meet the target set by the XIII Party Congress. When implemented, fiscal policy solutions, along with monetary policy, will contribute to supporting, promoting recovery and development of production and business, especially important industries and sectors heavily affected by the epidemic. Thereby, it is imperative to strive to achieve the 5-year growth target (2021 - 2025) 6.5 - 7% per year.
Fiscal policies support enterprises, cooperatives and family business to improve business capital flows to overcome difficulties, restore production and business activities, avoid losing orders, customers, consumption markets and affect the development in the medium and long term of enterprises. At the same time, creating jobs, supporting workers to find jobs, training and retraining, creates income and sustainable career transformation for employees, ensuring social security.
Strong, focused and fast-completed public investment projects will contribute to a breakthrough in infrastructure, reduced transportation time and costs for businesses. The implementation of fiscal policy solutions will contribute to the improvement of the investment and business environment, labor productivity, competitiveness, internal capacity, and autonomy of the economy.
Fiscal policy solutions, although creating pressure on budget balance and public debt in the short term, will contribute to sustainable new revenue sources for the state budget and national financial stability. At the same time, closely coordinating the implementation of fiscal policy with monetary policy ensures macro-economic stability. The Ministry of Finance focuses on managing the insurance market, the stock market, especially corporate bonds to ensure the country's sustainable economic development.
Proactively, drastically and effectively implementing fiscal policies
Determining the importance of monetary policy solutions to support the Program to life in the fastest and earliest time, the Government's Resolution No.11/NQ-CP has asked ministries, central agencies and localities to focus on implementing, urgently devise specific programs and action plans to implement assigned tasks and solutions; uphold responsibilities, especially the responsibility of the head in leading, directing the organization and implementing the contents and policies; no room for the situation of "ask - give" that causes difficulties, troubles, negatives for people and businesses and proactively handle arising problems.
Pursuant to the Resolution of the National Assembly and closely following the tasks assigned by the Government, the Ministry of Finance assigned tasks with specific completion deadlines to units in the Ministry, with 18 presiding tasks and 13 tasks in coordination with other ministries and agencies, including many tasks to be completed and submitted to competent authorities for promulgation in the first quarter of 2022, such as 1- Documents detailing value-added tax reduction policies; 2. Providing reduction of land rent, time extension of payment of taxes and land rent; 3. Deciding on the bond underwriting plan of the Bank for Social Policy to provide loans to policy beneficiaries; 4. Guiding the implementation of interest rate support to the Bank for Social Policy; 5. Guiding loan policies for students to purchase computers for online learning; 6. Removing difficulties and problems in the use of the fund for scientific and technological development of enterprises; 7. Coordinating in guiding the implementation of loan interest rate support from the state budget for enterprises, cooperatives, family business.
In fact, up to this point, the Ministry of Finance has submitted a decree guiding tax exemption and reduction policies (Decree No. 15/2022/ND-CP, dated January 28, 2022, effective from February 1, 2022); Decree on registration fees (Decree No. 10/2022/ND-CP, dated 15-1-2022, effective from 1-3-2022) to the Government for promulgation; it is urgently finalizing draft legal documents to guide their implementation. First, the draft Decree extending the deadline for paying corporate income tax, personal income, added value, excise and land rent in 2022. Second, the draft Circular on the use of the Fund for Scientific and Technological Development of enterprises. Thirdly, guiding the implementation of interest rate support for the Bank for Social Policy. Fourth, guidelines for implementing loans for students to buy computers for online learning due to the impact of the COVID-19 pandemic; at the same time, actively coordinating with the State Bank, the Ministry of Planning and Investment, the Ministry of Construction, the Ministry of Education and Training, ministries, central and local agencies to implement the Program.
In addition, closely following the direction of the Government, the Prime Minister and the Ministry of Finance to strengthen the management and close supervision of revenue sources, strive to increase revenues, reduce overspending, and thoroughly save state budget expenditures, especially career expenditures of investment nature; promoting the tax reform roadmap; reducing the rate of tax arrears; implementing e-invoices; taking advantage of room to increase state budget revenues, especially room to increase revenue for cross-border digital transactions and services on digital platforms; recovering regular expenses that are slow to allocate and deploy to additional resources implementing the Program./.
(1) GDP growth in 2020 will reach 2.91% compared to the plan of 6.8%; in 2021, it will reach 2.58% compared to the plan of 6%(2) Including: 1- Conclusion No. 77-KL/TW, dated 5-6-2020, of the Politburo, which requires overcoming and removing difficulties in production and business, preparing resources, developing special policies, taking advantage of opportunities, improving internal capacity and competitiveness, resilience and autonomy of the economy; 2- Conclusion No. 16-KL/TW, dated 8-10-2021, of the Politburo requesting the preparation of a feasible plan for socio-economic recovery in the coming time; 3- Conclusion No. 20-KL/TW, dated 16-10-2021, of the 4th Central Conference XIII "prepare feasible plans for socio-economic recovery in the coming time and build a growth scenario in the new situation, not allowing Vietnam to fall into economic recession and decline growth drivers in the long term". (3) Including: 1- Resolution No. 16/2021/QH15, dated 27-7-2021, "On the 5-year socio-economic development plan 2021 - 2025", which requires research, development and implementation of a feasible and effective economic recovery and development program; 2- Resolution No. 32/2021/QH15, dated 12-11-2021, "On the socio-economic development plan in 2022"; 3- Resolution No. 41/2021/QH15, dated November 13, 2021, "On questioning activities at the 2nd session of the XV National Assembly" and Resolution No. 42/2021/QH15, dated November 13, 2021, of the National Assembly, "On the 2nd Session, The XV National Assembly" determines the objectives in 2021 to urgently develop, submit to competent authorities for approval and implement the socio-economic recovery and development program. (4) Conclusion No. 24-KL/TW, dated 30-12-2021, of the Politburo. (5) 5-year socio-economic development plan 2021 - 2025, economic restructuring plan for the period 2021 - 2025, national financial plan and 5-year public debt repayment and loan period 2021 - 2025, medium-term public investment plan for the period 2021 - 2025, Room program, fighting the COVID-19 epidemic (2022 - 2023). (6) Resolution No. 23/2021/QH15 stipulates that the public debt target has a warning threshold of 55% of GDP, the public debt ceiling is 60% of GDP; Government debt has a warning threshold of 45% of GDP, the ceiling allowed by the National Assembly is 50% of GDP.
This article was published in the Communist Review No. 991 (June 2022)