Fiscal easing sought to foster economic growth
Fiscal easing sought to foster economic growth
The Government should boost public investment via government bond issuance to the major projects currently in financial distress, all for the sake of economic growth, said Chairman Vu Viet Ngoan of the National Financial Supervisory Commission (NFSC).
In a report delivered at the Government meeting last week, Ngoan said policymakers should give priority to economic growth to realize the target of 5.5% for this year by taking more drastic measures to stimulate demand.
Total investment in the first half of the year only stood at 29.6% of GDP, versus 40% in previous years, according to the General Statistics Office (GSO).
Such low investment casts a gloomy economic outlook since Vietnam’s economy has always depended on capital, said GSO Director General Do Thuc.
Ngoan suggested the Government boost spending on the key projects, especially the projects set for completion in 2013 and those likely to be completed in 2014.
He also hoped the Government would soon settle the capital construction debt of VND94 trillion to businesses.
As the State budget revenue is about VND65 trillion below estimate, NFSC proposed the Government use the government bond issuance quota for 2014 in advance to meet with capital demand in 2013.
In addition, the commission called for all-out efforts to achieve the credit growth target of 12% for 2013 to ensure investment in the economy.
The above proposals were given in the context of fragile economic recovery due to sluggish demand and high production costs at home. Thus, the 5.5% growth target for this year remains a big challenge, said Ngoan.
The underlying cause is slow recovery of domestic demand. For example, the purchasing managers’ index (PMI) of Vietnam’s manufacturing sector published by HSBC showed that new order volume in May fell for the second time in four months, mainly due to the poor conditions of the local market, whereas the level of new export orders continued to improve.
Total investment in the first six months only met 40% of the year’s target. Meanwhile, total retail sales of goods and services, excluding the price hike factor, picked up 4.9%, versus 6.5% in the same period last year.
Consumer credit has been declining in 2012 and significantly affected aggregate demand in the year’s first half.
Besides weak demand, high costs also had a negative impact on production, said NFSC. Having worked with businesses in Quang Ninh, the commission informed enterprises were bearing the burden of multiple costs, including transport costs, land rents, and the costs brought by capital construction debt, procedures for project approval and difficult access to bank loans.
vietnamnet
