Fiscal policy tools to be used to reach growth targets
While the economic growth target of 6-6.5 per cent in 2024 is entirely feasible, the government will need to continue to prioritize the use of fiscal policy tools with the support of monetary policy, promoting domestic aggregate demand, to maintain high and sustainable growth momentum over the next one to two years. Firstly, capital must be used from the VND40 trillion ($1.6 billion) socio-economic recovery and development program to provide additional capital for credit guarantee funds in localities and increase unsecured loans for small and medium-sized enterprises (SMEs). Secondly, there needs to be more credit packages for businesses to invest in sustainable, carbon-neutral production. Thirdly, consideration must be given to applying investment tax credits to businesses in priority sectors. Fourthly, medium-term lending tools must be used at commercial banks, similar to China’s Medium-term Lending Facility (MLF).