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IMF says Vietnam government stimulus cost may be 4 pct of GDP
The government’s package of measures to stimulate its economy may be valued at about 4 percent of gross domestic product, or about US$3.8 billion, the International Monetary Fund (IMF) said.
But estimates on the size of the stimulus package vary. Last month, Nomura Holdings Inc. cited a figure of about $6 billion while Indochina Capital Vietnam Holdings Ltd. gave a figure of $971 million. The government hopes to use stimulus spending to boost a first-quarter economic growth rate of 3.1 percent, the slowest on record.
While some of the stimulus measures have already been implemented, a revised budget plan is not expected to be submitted until May, the IMF said, as part of a report dated this month and released on its website. The agency said it has made an estimate based on “limited available information.”
“The aggregate cost of the stimulus package could be large, 4 percent of GDP,” the IMF said. Still, the agency added that “the total size of the fiscal stimulus in 2009 and how it will be financed are still not clear.”
Among the stimulus measures cited by the IMF are subsidized credit for businesses; a reduction or deferral of corporate income tax for some companies; delays in personal income-tax payments; increased social safety net measures, such as investment in housing for the poor; and the elimination of some export taxes.
Efficiency concern
“While measures to support the poor and the removal of some export duties are welcome, staff is concerned that other measures are inefficient and not well targeted,” the IMF said, without specifying which ones.
In cutting its growth forecast for Vietnam this year to 4.8 percent, the IMF warned that a “large” stimulus package could weaken Vietnam’s external position and hurt the country’s “fiscal sustainability,” unless additional concessional external financing is found to pay for it.
The World Bank may help arrange more official development assistance, known as ODA, to help finance the stimulus package, given that recent bond sales have not raised sufficient funds, said Martin Rama, lead Vietnam economist for the agency, speaking Tuesday in Hanoi.
The government has extended its support to subsidize 4 percent of loans to the end of 2011, instead of the end of this year, and allow more beneficiaries than just those involved in the export, import and production of essential products.
thanh nien, bloomberg
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