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What are the sources for the $6 billion stimulus package?
The economic stimulus package, worth nearly VND 110 trillion or US$ 6 billion, according Deputy Prime Minister Nguyen Sinh Hung, is not a specific financial package which will be directly pumped into the economy, but it comes from tax reductions, the issuance of bonds, guarantee for international loans, and social welfare.
Hung said, at the meeting between the government and representatives of 104 State-owned groups and corporations in Hanoi on Tuesday, that the $6 billion package will be comprised of approximately VND 20 trillion (over $1.176 billion) that the government advanced last year, but has still not spent, VND 20 trillion from government bonds, VND 20 trillion from tax reductions that the government has not collected yet, VND 17 trillion ($1 billion) of reserves, and VND 30 trillion ($1.5-2 billion) from international loans guaranteed by the government.
The Deputy PM’s announcement put an end to the rumor that the government would withdraw part of the $22 billion of reserved foreign currency to directly pump into the economy.
“The government will have approximately VND 100-110 trillion ($5-6 billion) for the comprehensive demand stimulus package, not $1 billion as it announced,” Hung said. The Ministries of Planning and Investment and Finance are working on the plan.
Minister of Planning and Investment Vo Hong Phuc said the government is weighing the idea of using the announced $1 billion package to compensate banking interest rates for loans for businesses.
The $6 billion package was announced in the context of the consumer price index (CPI) being at a negative level during the last four months of 2008, which is considered a signal for economic regression (Phuc said that the CPI for December would not be higher than November – at 0.7%).
The State budget spending approved for 2009, by the National Assembly, is VND 119 trillion ($7 billion) and the question is what percentage does the $6 billion stimulus package account for in the $7 billion sum?
At the meeting with State-owned groups, Hung urged them to borrow capital from banks to develop production and pledged that the lending interest rates would continue to decrease from the current 11% level.
The Deputy Prime Minister said the Government aims to have a credit growth rate of 20-25% in 2009, compared to 19% this year. He asked State-owned groups to restart projects with investment capital of over VND 39 trillion ($2.294 billion), which were delayed or canceled in mid-2008 to prevent inflation.
SGTT
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