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Fiscal Policies in Vietnam
Transcript of Fiscal Policies in Vietnam
Ha, Leo, Jason Fiscal Policies in
Vietnam Fiscal policy is the means by which a government adjusts its levels of spending in order to monitor and influence a nation's economy. It is the sister strategy to monetary policy with which a central bank influences a nation's money supply. These two policies are used in various combinations in an effort to direct a country's economic goals such as to regulate unemployment, business cycles, inflation and the cost of money. Definition of Fiscal Due to the introduction of many various economic policies, inflation and budget deficit were brought under control in Vietnam. As part of the fiscal policy reform in Vietnam, it was felt that the budget revenue of the state pertaining to exports as well as imports should be able to render enough protection at the time of crisis. Fiscal policy in Vietnam WTO requirements affected on Vietnamese
- Tariff related to imports ought to be reduced.
- The charges as well as the fees imposed on
export activities and import activities.
- Direct budget expenses, which include export
related subsidies, subsidies related to the
state owned enterprises be removed. Fiscal policy of Vietnam
in 2007 The world witnessed the unfolding and heavy repercussions of the global financial crisis which affected Vietnam. Monthly export dropped successively in the last months of 2008 and early 2009. Foreign direct investments declined significantly. Consumer sentiment was adversely affected and the stock market index kept falling. The situation deteriorated further in early 2009 when the GDP growth rate in the first quarter was only 3.1% and for the first half 2009 it was only 3.9% as compare with the annual average of 7%. Fiscal policy of Vietnam in 2008 and the first half 2009 In order to fight inflation, both the fiscal and monetary policies were tightened. However, the fiscal policy was not tightened drastically enough. Meanwhile, with the tightened monetary policy, the credit growth rate in 2011 dropped to 14.47 percent, which then pushed the inflation to 18.13 percent Thank You! Fiscal policy is based on the theories of British economist John Maynard Keynes. Also known as Keynesian economics, this theory basically states that governments can influence macroeconomic productivity levels by increasing or decreasing tax levels and public spending. This influence, in turn, curbs inflation (generally considered to be healthy when at a level between 2-3%), increases employment and maintains a healthy value of money. How Fiscal Policy Works From 2009 – 2010, credit was a lot more accessible and debt subsequently increased by 30 per cent year on year. Meanwhile, the gross domestic product (GDP) in 2009 increased by only 5.32 per cent, by 6.78 per cent in 2010, and 2011, rose by 5.89 per cent. This situation has had a serious impact on our economy. As a result, annual inflation jumped by over 18 per cent in 2011. At that time, the Government had to tighten fiscal and monetary policies, including reducing public spending, State Budget overspending and curbing rapid credit growth in an effort to stabilize macro economy and control inflation. Fiscal policy of Vietnam in 2009 and 2010 Fiscal policy of Vietnam in 2008 and the first half 2009 Fiscal policy of Vietnam in 2011 The Vietnamese Government will strengthen the management of revenues and cut expenses, reduce the state budget deficit to below 4.8% of GDP (gross domestic product) in 2012 and it will decline gradually in the following years. Fiscal policy of Vietnam in 2012