Banking & Finance

State budget expenditure in 2022 is estimated at VND1.78 quadrillion ($78.09 billion), of which development investment expenditure is more than VND526 trillion ($22.7 billion). However, according to a report from the General Statistics Office, as of mid-March, spending on development investment reached only VND47.4 trillion ($2.07 billion), or 9 per cent of the annual estimate.

Fitch Ratings affirmed on March 28 that Vietnam’s long-term foreign currency deposit ceiling rating was at BB - a positive outlook. It also forecast that the country’s GDP growth will reach 6.1 per cent in 2022 and 6.3 per cent in 2023, led by recovery in domestic demand, exports, and FDI inflows.

The interest rate differential between the primary and secondary bond markets is widening. In addition, credit institutions are participating less in the government bond market due to concerns over high inflation as well as expectations of a new interest rate hike. The pressure to increase government bond interest rates in the primary market is therefore becoming clearer.

While other countries are racing to research and test a central bank digital currency (CBDC), Vietnam remains quite slow in this regard. In order for its economy to not be left behind, Vietnam must make greater efforts to join the movement. With a young population, high internet coverage, and the popularity of mobile devices, Vietnam has a solid foundation for the success of a CBDC.

Inflation is currently being supported by three factors: the price of food, the government’s management of pricing, and monetary policies. However, the inflation rate may not remain at its current low level due to many factors. Analysts have predicted that if global oil prices remain at $100 a barrel, inflation may reach 3.5 per cent, but if the price reaches $120 a barrel, the rate will breach the 4 per cent limit.

To support businesses affected by Covid-19 since 2020, the Ministry of Finance has implemented a number of solutions to exempt and reduce taxes, fees, charges, and land rentals worth a total of more than VND477 trillion ($21 billion). The ministry is also collecting comments on a draft decree extending the deadline for paying VAT, corporate income tax, personal income tax, land rentals, and water surface rentals in 2022.