Vietnam approves $15.3 billion in aid for COVID-hit economy

Government says it seeks ‘sustainable’ growth that ensures macroeconomic stability while controlling inflation.

Vietnam’s parliament approved a stimulus package worth about 347 trillion dong ($15.3 billion) to revive an economy battered by Covid-19 and harsh lockdowns with a focus on assisting virus-hit businesses, workers and increasing infrastructure spending.

The National Assembly voted on a plan that had been significantly reduced over concerns it would spur inflation.

Vuong Dinh Hue, chairman of the National Assembly, told a forum in Hanoi last month that the government seeks “sustainable” growth that ensures macroeconomic stability while controlling inflation, according to a posting on the government’s website. Policymakers in November were weighing 800 trillion dong in stimulus measures.

Vietnamese officials are seeking to mend an economy damaged by tough anti-virus lockdowns, which led to factory closures that crippled global supply chains.

The stimulus package includes about 170 trillion dong in infrastructure spending for 2022-23.

It also has measures to reduce bank loan interest rates by about 1 percentage point and delay loan payments to help businesses. The central bank will intervene in the money market by selling dollars to stabilize foreign exchange rates when needed.

The parliament also approved an increase in the state budget deficit by a total of 240 trillion dong for the 2022 and 2023.

By Nguyen Dieu Tu Uyen – Bloomberg – January 12, 2022