ANALYZE GOVERNMENT SPENDING MEASURES IMPLEMENTED

BY VIETNAM IN RESPONSE TO IMPACT OF COVID - 19

I. Overview of the state budget situation during the Covid period and
issues arising
1. The problem arose
• In the third quarter of 2021, the labor force working in the economy decreased
sharply compared to the same period last year, the unemployment rate and
underemployment among working age increased at the highest rate since the first
quarter of 2020.
• Many businesses faced the risk of bankruptcy. In the first nine months of 2021,
the total number of newly established enterprises reached 85.5 thousand enterprises,
down 13.6% over the same period last year.
• Social investment capital at current prices in the first nine months of 2021 only
increased by 0.4%, The number of international visitors to our country is low over the
same period last year because many localities applied social distancing measures,
• The Covid-19 epidemic has complicated developments in many localities,
especially those that have to implement social distancing, which has affected
production and business activities and the results of State budget revenue in the first 9
months of May 2021.
2. Overview of the state budget situation during the Covid period
2.1. Impacts on reducing state budget revenue
State budget revenue is expected to decrease in all three areas: Domestic
revenue, revenue from import - export activities and revenue from crude oil due to
unpredictable developments of the Covid 19 epidemic
For revenue from business activities: Some industries and fields such as
tourism, transportation business, commercial services, import and export of goods are
most affected by the direct impact of the Covid-19 epidemic. When the production -
business activities of these industries face difficulties, the revenue/profit decreases,
leading to a decrease in the amount of tax payable to the state budget.
When a number of industries and fields are negatively affected by the
epidemic, the production areas are also adversely affected, investment activities
decrease in both the short and long term.
2.2. Impact on state budget
In order to prevent, control and stamp out epidemics, the state budget is forced
to increase spending on health activities, ensuring environmental sanitation and other
activities. The State also has to increase budget spending on activities to ensure social
security when the epidemic makes the production and business situation difficult,
affecting labor and employment (especially and especially workers in the tourism,
service, food business ...), leading to high unemployment. In addition, in case the
epidemic lasts a long time, greatly affecting economic growth and people's lives, it
may be necessary to apply measures to stimulate the economy, increase investment
and consumption to maintain the growth momentum. At present, it will be forced to
increase state budget spending to implement these measures. Thus, if the epidemic
situation becomes stressful and unpredictable, the state budget deficit will increase
due to a decrease in revenue and the need to increase state budget expenditure.

II. Government spending measures implemented by Vietnam in

response to the impact of Covid-19
Measures to support citizens
1. Spending on vaccines and epidemic prevention
By the end of September 2021, the Government and localities have spent about
18,100 billion VND to buy COVID-19 vaccines for injection for the whole country.
In 2021, the state budget has spent VND 74 trillion for epidemic prevention
and control and supporting people facing difficulties due to the Covid-19 epidemic.
2. Social security packages
On April 9, 2020, the Prime Minister issued Resolution No. 42/NQ-CP on
measures to support people facing difficulties due to the Covid-19 pandemic. The
social security package aims to support about 20 million people in the following these
categories:

Table 1. Social protection measures adopted in the aid package

Up to mid-August 2020, about 16 million people from different groups of
workers had received support, with the total disbursement amounting to just over 17
thousand billion VND (approximately 19%). The people who received support were
mostly from the group of workers belonging to the insured sector, workers who have
merit, and poor households.
3. Other expenditures for supporting citizens
 As of October 15, 2021:
• Nearly 21.89 trillion VND for 24.26 million individuals; loaned 566
billion VND to pay wages for over 161 thousand employees (according to Resolution
68/NQ-CP).
• Settled for nearly 430 thousand employees who are participating in
unemployment insurance and over 111 thousand people have stopped participating
with a total support amount of 1,251 billion VND; in which the total amount paid is
999.5 billion VND for over 425 thousand employees (according to Resolution
116/NQ-CP).
• Over 137 thousand tons of rice to support over 2.4 million households
with over 9.1 million people in 31 provinces and centrally-run cities.
• Reducing the price of electricity (about 4,500 billion VND), water,
telecommunications and internet services (about 10,000 billion VND).
In 2021: 141.97 thousand tons of rice were given to people in 33 localities.
Measures to support companies
4. Interest rate incentives
There is a credit package to reduce interest and new loans worth approximately
300,000 billion VND with a preferential interest rate than ordinary credit from 1% -
2.5%/year. The extension of tax payment and land rent for subjects affected by the
COVID-19 epidemic was issued by the Government under Decree No. 41/2020/ND-
CP dated April 8, 2020. Also, there is an electricity price reduction package of VND
11,000 billion and a support package of VND 15,000 billion for internet and
telecommunications. In addition, public investment projects and public-private
cooperation projects with a total value of up to VND 700,000 billion are ready to be
activated to "inject" money into the economy, creating demand for consumption and
investment.
5. Accelerating the public investment disbursement
The total approved public investment from the government budget in 2020 was
nearly 700 thousand billion VND, which includes 470.6 thousand billion VND in
government budget estimation in 2020 and 225,2 thousand billion transferring from
2019. The determination and consistency of the government in boosting public
investment capital disbursement can be presented in a vast amount of documents:
i) Resolution No. 84/NQ-CP on 29th May 2020
ii) Official dispatches No. 622/TTg-KTTH and 623/TTg-KTTH on 26th May
2020; Announcement No. 242/TB-VPCP on 18th July 2020.
6. Investment plan
According to Resolution No. 43/2022/QH15, the Government decided to
increase the government expense up to 176 billion USD for the period 2022-2023.
This increase in government spending includes the measures below:
Medical sector
 To allocate up to VND 14 thousand billion to invest in new construction,
renovation, upgrading and modernization of the health system, improve epidemic
control, etc.
Social security, labor and employment sectors
To grant Vietnam Bank for Social Policies (VBSP) up to VND 5 thousand
billion, including interest rate cover and management fees of VND 2 thousand billion
in order to implement preferential credit policy within the Program. And to support
interest rates of up to VND 3 thousand billion for debtors of policy credit programs
with an applicable interest rate of more than 6% per year.
Business support
To support an interest rate (2% per year) of up to VND 40 thousand billion via
a commercial institution system for important sectors, enterprises, cooperatives and
household businesses capable of repaying debt and recovering. Additionally, to grant
a loan for the renovation of old apartment buildings, construction of social houses, and
houses for purchase, rent, and lease purchase. Lastly, to grant the Tourism
Development Assistance Fund up to VND 300 billion in charter capital.
Monetary policy
The main goal of the Vietnamese Central Bank is to contain inflation to under
4%.

Table 2: Government
policies to support people
and businesses affected by
COVID-19

III. RESULTS AND MEASURES EVALUATION

1. Some positive socio-economic results in 2021
Vietnam has received a lot of praise from the United Nations and the World
Health Organization for its efforts in preventing the COVID-19 pandemic. As a
developing country, Vietnam has adopted a number of reasonable preventive
measures to prevent the disease early.
Up to now, the total number of deaths from COVID-19 in Vietnam so far is
43,149, accounting for 0.4% of the total number of infections. The total number of
deaths ranked 26/230 territories, the number of deaths per 1 million people ranked
138/230 countries and territories in the world.
In 2020, despite numerous difficulties due to COVID-19, our country's
economy is still resilient to positive growth, developing nearly 3%, among the rare
countries with positive GDP growth in the world. In 2021, the Covid-19 epidemic will
continue to have a heavy impact on the world economy. However, Vietnam still
strives to maintain abGDP growth rate, even reaching a new record in exports,
entering the top 20 economies in terms of international trade.

2. State budget spending policy and implementation results

In 2020 and 2021, the state budget spending policy focuses on epidemic
prevention and control, supporting people and businesses affected by the Covid-19
epidemic in order to remove difficulties for the production and business, ensure social
security, and at the same time focus resources on key and important projects and
projects with pervasive power to promote socio-economic development.
The health sector is focusing resources on epidemic prevention and control. In
2020 and 2021, priority has been given to allocating the state budget to support
disease prevention and control. In which, many regimes and policies for state budget
spending for Covid-19 epidemic prevention and control have been issued.
Specifically,the state budget expenditure in 2021 will reach 111.4% of the
estimate, in which priority is given to allocate funds for the prevention and control of
the Covid-19 epidemic, overcoming the consequences of the epidemic, and ensuring
social security.
As of December 31, 2021, the state budget has decided to spend a total of 74
trillion VND, of which 45.1 trillion VND is spent on Covid-19 prevention and control
and 28.9 trillion VND to support people who are facing difficulties due to the Covid-
19 epidemic. In 2021, national reserve supplies and equipment for epidemic
prevention and control were also promptly issued to support people to overcome the
consequences of the epidemic and to support during the Tet holiday and the beginning
of the year 2021.
Unit: Billion VND

Figure 2. State budget expenditure, 2011 - 2021

Source: Ministry of Finance Policy
3. Assessment on social security support
3.1. Most poor households, near-poor households and beneficiaries of
social allowances have been supported
According to a report by the Ministry of Planning and Investment, the
implementation of the support policy of Resolution No. 42/NQ-CP basically meets the
requirements and principles set out by the Government and the Standing Committee of
the National Assembly. are the principles: ensuring public support, transparency, right
audience, not to be taken advantage of, policy profiteering; support those with deep
income reduction, loss, underemployment, difficulties, and failure to ensure a
minimum standard of living.
Most of the poor, near-poor households and people receiving social allowances
have been supported. In the implementation organization, although the target groups
subject to social policies are regularly managed and monitored by functional agencies,
the review and list making is still strictly implemented by localities. carefully,
minimizing duplication, duplication and abuse of policies. The localities have fully
and basically timely spent up to 100% of the objects declared on the list.
A part of people affected by the COVID-19 pandemic the most, whose income
has been deeply reduced has been supported (such as individual business households,
workers who have been laid off without pay; lost their jobs, have no income) or have
incomes below the near-poor line, do small jobs in the informal sector).
For the support subjects who are employees without a labor contract who lose
their jobs, the review and making of lists is carried out from residential groups,
hamlets, communes, wards with active participation. From the outset, from the very
beginning of socio-political organizations and residential communities, the results
were publicly listed at village cultural houses and residential groups, so although
identifying the subjects was very difficult, it was sensitive but supported the right
audience.
3.2. Support the right audience; the phenomenon of policy abuse and
exploitation has not been recorded
The support policies are unprecedented in Vietnam; a method of direct cash
support with a large number of subjects, large deployment areas, many new and
complex subjects (such as employees, including informal workers, business
households); The state budget plays a key role in the implementation of support
policies.
However, up to now, the implementation of the support policy is basically the
right audience; The phenomenon of taking advantage of and taking advantage of
policies has not been recorded, wrongly spending the state budget, violating discipline
and recovering the budget.
Government policies have created a basis for localities to proactively and
flexibly issue their own support policies depending on specific conditions; at the same
time, there is a basis for promulgating support policies for the next period.
After more than 1 year of researching, developing and organizing the
implementation of Resolution No. 42/NQ-CP, it also helps state management agencies
gain more experience, continue to perfect the construction and organize the
implementation of policies. supporting policies to both deal with similar urgent
situations in the future more effectively and increase awareness of conditions that can
ensure the sustainability and comprehensiveness of social security policies long term.
4. Results and evaluation of corporate interest rate support policy
 In terms of firm size, the medium and large enterprises received a lot of
support. In particular, 37.73% of firms that received support were the small and
medium-sized firms (with the size of from 50 to less than 200 employees), while large
enterprises (with more than 200 employees) accounted for 34.04%. However, for
businesses with less than 10 employees, this figure was only roughly 13%.

Out of 22.25% of businesses supported, the industry that benefited from

support the most were those in the tourism, accommodation, food and beverage sector
(36.36%), followed by textile (24.66%), logistics (24.59%) and real estate ( 24.19%.
The rest of the industry had received a lower rate of support than the general average,
of which the lowest was the technology industry (only 6.67% of businesses were
supported).
 Thus, it can be seen that a series of policies have been successively introduced
by the Government based on the continuous fluctuations and the actual context of
adapting to the epidemic in order to maintain production, stabilize life as well as
maintain a healthy living environment. operating viewpoints in the fight against the
epidemic in each period.
5. Evaluation of the government's public investment policy
However, the disbursement of investment capital still has difficulties and
obstacles:
i) The big bottleneck for the implementation of public investment projects is
the compensation work. compensation for ground clearance encountered many
difficulties and problems regarding unit prices and compensation plans.
(ii) Both the investor, the project management board and the contractors are
afraid to disburse many times, afraid to go through the procedures for payment and
finalization of capital many times, so they mainly disburse the capital at the last time.
five.
(iii) Projects using ODA loans and concessional loans from foreign donors are
heavily affected by the pandemic, because most of their activities are associated with
foreign factors, from importing machinery and equipment to the mobilization of
foreign experts, workers and contractors. The above factors have affected the
implementation progress of most ODA projects.

6. Measures that Vietnam has applied related to public spending to respond

to the impacts of the Covid-19 epidemic
 In general, the policies and solutions that have been issued have a combination
of fiscal policy, monetary policy. currency and other policies to support the industry
or social security, which includes a group of short-term solutions, mechanisms and
policies in a number of specific industries and fields, a group of fundamental and
long-term solutions to solve the problem. remove difficulties for economic growth,
support people and businesses; basically consistent with the evolution and impact of
the epidemic, similar to the new approach of many countries around the world, highly
appreciated by the people and business community.
The policies are implemented at a low cost, so they do not affect the major
balances of the economy, and at the same time, they reserve room to continue
developing and implementing solutions in the next period.
As a result, it has made an important contribution to stabilizing the macro-
economy, ensuring social security, helping Vietnam to be among the few countries to
achieve positive economic growth in 2020 (the peak of the Covid-19 epidemic),
maintain the country's positive economic prospects in the medium and long term and
strengthen people and businesses' confidence in the guidelines and policies of the
Party and State.
7. International assessment of Vietnam's fight against the epidemic
The website of the World Economic Forum (WEF : “Viet Nam shows how you
can contain COVID - 19 with limited resources”, roughly translated: “Vietnam shows
how you can fight COVID - 19 with limited resources” reviews Vietnam’s effective
response to the pandemic. Covid - 19 acute respiratory infection, becoming a
"lighthouse" on how to do with limited resources.
“COVID limited” is the content of the article posted on the Russian website
zen.yandex.ru (zen.yandex.ru is the 4th largest search site in the world). Vietnam is
one of the few countries with good disease and thus can promptly support many other
countries, typically by donating masks and epidemic prevention equipment to
neighboring countries. neighbors in Don g South Asia as well as European countries.
According to the International Monetary Fund (IMF): “Early on, the Prime
Minister gave priority to people's health over economic issues. This strategy was
quickly deployed with the participation of the army, security forces and units at the
base. Those are the unique features of Vietnam in the fight with Covid-19”.
According to the Times of India Evaluation: “Vietnam's success in dealing with
two waves of Covid-19 shows that psychological preparation and resources to deal
with infectious diseases is a key factor to protect people”.

IV. LESSONS LEARNED FOR VIETNAM

Policies at this stage need to adjust from providing comprehensive support to
focusing on the areas most affected by the pandemic. In addition, the government
should pay attention to the selection of beneficiaries of support policies.
 The Ministry of Finance, ministries, branches and localities should prioritize
arranging and allocating the state budget and other lawful resources to ensure funding
for COVID-19 disease prevention and control and medical treatment facilities treating
COVID-19 patients.
To cut at least 50% of the remaining costs of conferences, domestic and foreign
affairs of ministries, central and local agencies and save an additional 10% of the
remaining regular expenses of 2021, excluding salaries and other expenses other
income; recovery of recurrent expenditures that are not really necessary, slow
implementation to supplement the central budget and local budgets, and focus funds
on COVID-19 epidemic prevention and control.
On the basis of the assigned budget estimates and other lawful funding sources,
ministries, branches, localities, agencies and units should proactively decide to use
and procure according to scenarios and response plans approved by the competent
authority and to minimize waste of resources.