Coordination in Macroeconomic Administration in 2015

This first important meeting aimed to concretise the Government’s guidance and implement the Prime Minister’s Decision 1317/QD-TTg dated August 16, 2013 on reform of coordination mechanisms in macroeconomic management and administration. Besides, the event detailed contents in their “Coordination regulation in macroeconomic management and administration” signed on December 1, 2014. According to this regulation, the Ministry of Planning and Investment is responsible for building and operating economic growth objectives. The ministry is also liable for making quarterly reports on results of coordination in macroeconomic administration. In addition to periodical meetings, the ministries will have monthly, quarterly and annual reports. Each ministry will set up a coordinating agency with members being related affiliated units.

 

According to experts and policymakers, this new regulation will concretise the implementation of Governmental Regulation to strengthen the consistency, effectiveness and efficiency of macroeconomic administration, and respond promptly and effectively to domestic and foreign economic and social upheavals from time to time. In addition, the signing of a coordination regulation by four ministries will help formulate a stable macroeconomic environment and a favourable, transparent and predictable business environment to contribute to attract more investment, promote production and business development, and create a solid foundation for sustainable growth.

 

Under the direction of the Government, the Ministry of Planning and Investment will be a lead agency in building economic development tasks. The ministry will regulate and administer such issues as GDP growth, total social investment, State credit capital, corporate investment, public - private investment, and social consumption.

Regarding inflation curbing tasks, the State Bank of Vietnam, or the central bank, is responsible for building and regulating this objective. The SBV will focus on total outstanding credit to the economy, total payment means, interest rates, balance of payment, and exchange rate. The Ministry of Finance will lead or cooperate with other ministries, branches and localities to provide information about pricing administration, export and import tariffs of commodities imposed to State pricing management, fundraising on the stock market and foreign debt management. The ministry will also have opinions about exchange rate, interest rate, liquidity and other issues.

 

With respect to budget collection and expenditure, the Ministry of Finance is assigned to build and carry out fiscal policies, including revenue and expenditure balance, state budget deficit, domestic and foreign debt and repayment management, public debt, foreign debt and international aid. The ministry will make quarterly reports on coordination in State budget balance.

 

In export, import and trading activities, the Ministry of Industry and Trade is answerable to regulate domestic trade, import, export and trade balance. The focus will be placed on domestic market development, export, import and trade balance. The ministry will make quarterly reports on results of coordination in domestic trade, export, import and trade balance administration.

 

Due to steep plunges in global crude oil prices, Vietnam has to slash output by 30 percent, which may result in a 0.8-1.2 percent shrinkage in GDP growth. Minister of Planning and Investment Bui Quang Vinh said that Vietnam produced over 15 million tonnes of crude oil in 2014.

 

Vietnam’s crude oil production cost ranges from US$30 to US$70 a barrel. Vietnam set benchmarked crude oil price at US$100 per barrel. If crude oil price drops by US$1 per barrel, the State Budget will lose VND1 - 1.2 billion accordingly. If the crude oil price is at US$70 per barrel in 2015, the State Budget will drop VND30 trillion. Thus, this reduction will substantially impact the State Budget in both exports and imports. However, all calculations are assumed. Vietnam needs measures to offset budget reductions to keep the economy unaffected, said Minister Vinh.