Currency and fiscal: Flexible, prudent

26-Jan-2021 Intellasia | Thoi bao Ngan hang | 6:52 AM Print This Post

Under the impact of the Covid-19 epidemic, the global economic recession, many strong fluctuations, forced countries to issue many policies to deal with the crisis. However, strengthening the coordination between macroeconomic policies, especially the coordination between monetary policy (monetary policy) and fiscal policy (monetary policy) is very important in order to both limit the negative effect and support economic recovery.

The same as almost countries in the world, the government of Vietnam also spends a considerable amount of budget to support people, businesses… The State Bank of Vietnam (SBV) also quickly stepped in and actively implemented monetary solutions to supporting the economy to respond to the pandemic. Specifically, SBV has flexibly and synchronously managed monetary policy tools to control inflation, stabilise the monetary and foreign exchange markets; at the same time, it also ensures the liquidity of the credit institution system to meet the capital needs of the economy. In particular, SBV has 3 times adjusted to reduce the operating rate, reduce the ceiling interest rates for deposits and short-term loans to create conditions for credit institutions to reduce lending interest rates, support the economy to recover soon after the epidemic.

Evaluation of monetary policy and fiscal policy, PhD. Vo Tri Thanh Member of the National Financial and Monetary Policy Advisory Council said that both policies are managed quite effectively; the coordination between the two policies is increasingly smooth. For example, in 2020, in the context that the government needs more resources to boost investment, SBV three-fold reduction in the operating interest rate has helped reduce the yield of government bonds, thereby supporting the State Treasury to easily raise capital. lower costs, save the government in the difficult budget context.

Dr Quach Manh Hao Research on Policy and Economy of Vietnam UK, Lincoln University UK also said that monetary policy and monetary policy have become catalysts for economic growth in 2020, something few countries do. through low interest rates, preferential credit and public spending packages and support businesses…

According to experts, in 2021, although Vietnam’s economy is evaluated positively, monetary policy and monetary policy still have to be in a state of supporting growth. But the challenge for the executives is to keep the monetary policy and monetary policy together and complement each other so as not to lose major macro balances.

Emphasising policy expansion in difficult times like 2020 is essential, but according to Dr Nguyen Duc Do deputy director of Institute of Economics and Financial, when the economy recovers, inflationary pressure will increase. Therefore, the administration of monetary policy should be prudent. “The year 2021 is not yet pressured, but the year 2022 can see more clearly the inflationary pressure because all countries loosen the money policy, the price of goods will increase”, PhD. Speaking degrees. Not only monetary policy, but according to him, monetary policy should also be normalised. On the one hand, continue measures to support people and businesses; on the other hand, continue to step up measures to restructure the State budget, cut spending, especially recurrent expenditures, improve thrift, efficiency and discipline in budget expenditure; speed up the disbursement of public investment capital, focus on disbursement on investment in essential socio-economic infrastructure systems.

Also think to be careful with inflation,

Dr Can Van Luc Chief Economist of BIDV suggested that it is necessary to improve the effectiveness of policy coordination, especially between monetary policy, monetary policy and price in order to control inflation targeting. In which, it is necessary to closely monitor, analyse and forecast developments of the international financial-monetary market in order to synchronously use policy instruments to stabilise the market. “For monetary policy to continue operating proactively, flexibly, in good coordination with monetary policy prudent, adaptive, ensuring stability of interest rates and exchange rates, contributing to curbing inflation…”, Recommended Can Van Luc.

Dr Vo Tri Thanh noted, the economic recovery is taking place in the context of the global economy with many uncertainties and risks, while the openness of the economy is increasing. That requires the art of policy management to match with the evolutions of the domestic and foreign markets, thereby responding quickly and effectively to external shocks. “In such a complicated context, it is necessary to closely monitor the political and economic situation, especially the monetary policy of major countries”, Dr Thanh recommends and proposed, in 2021, SBV tries to maintain the current interest rate level to help businesses overcome difficulties, as well as nurture the driving force for socio-economic development, support the economy. growth target.

Same point of view, Dr Quach Manh Hao said that if the year 2020 the loosening of monetary policy and fiscal year are catalysts for economic growth, in 2021, it should be adjusted in a cautious direction. Because interest rates too low will stimulate speculation, creating risks outside production and increasing asset bubbles. The proof is that the growth of the stock market over the past time does not properly reflect the prosperity of the economy. This implies an increase in the risk of bad debt next year.


Category: Finance, Vietnam

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