Fiscal and monetary policy and growth target

The economic picture in the first 7 months of the year has shown positive colors. According to the State Bank of Vietnam (SBV), credit growth reached 9.64% compared to the end of 2024 - the highest increase in the same period in recent years. Capital flows focused mainly on priority areas such as high-tech agriculture, supporting industries, exports and logistics infrastructure.

On the fiscal front, the Ministry of Finance said that the estimated disbursement from the beginning of the year to July 31 was VND388,301 billion, reaching 39.45% of the annual plan and equal to 43.9% of the plan assigned by the Prime Minister (in the same period in 2024, the corresponding figures were 27.76% and 33.8%). Many strategic infrastructure projects are entering the peak construction phase. This shows that the executive apparatus is making efforts to keep up with the requirements of promoting growth.

However, the journey from the “good signal” to the Government ’s target of “GDP growth of 8.3-8.5%” still has much to do, especially in the context of the strong USD putting pressure on exchange rates, interest rates and import costs. Monetary policy management this year is clearly “brain-weighing”. On the one hand, the State Bank must maintain exchange rates stable in the context of the US Federal Reserve (FED) maintaining a tight monetary policy; on the other hand, it must ensure sufficient liquidity for businesses to expand production and seize market opportunities.

The 9.64% credit growth in the first 7 months of the year reflects a focused and key effort to open the capital valve. However, to maintain this momentum, it is necessary to continue to prioritize capital for high value-added sectors, limiting flows into risky areas such as real estate speculation or short-term securities. In particular, the State Bank of Vietnam needs to be ready to adjust credit limits in the third and fourth quarters if the economy shows signs of needing to accelerate.

In terms of fiscal policy, this policy in 2025 has started faster than many previous years, but the disbursement rate of public investment capital still needs to increase. Each month of slow disbursement is a missed growth opportunity. In addition, according to many experts, the budget should focus on selective support packages - targeting small and medium enterprises, technological innovation, digital transformation, strategic infrastructure - instead of spreading it out. Expanding public-private partnerships (PPP) will be a "double lever": both reducing budget pressure and attracting social capital for important projects.

Regarding inflation, according to the General Statistics Office, in the first 7 months of the year, the average consumer price index (CPI) increased by 3.26% compared to the same period in 2024, and core inflation increased by 3.18%. It is forecasted that for the whole year, inflation will likely be controlled under the request of the National Assembly (4.5% - 5%), "even at the threshold of 3% - 3.4%" according to Dr. Nguyen Duc Do, Deputy Director in charge of the Institute of Economics and Finance.

This is a key factor that gives both monetary and fiscal policies more room to support growth without creating too much price pressure. However, import pressure due to the strong US dollar, along with fluctuations in global energy and food prices, can still push CPI up if policies are inconsistent.

According to many economic experts, from now until the end of the year, monetary policy needs to stabilize lending interest rates, ensure system liquidity, and flexibly regulate exchange rates. With the fiscal year, it is necessary to accelerate public investment disbursement, proactively prepare resources for key projects, especially projects with long-term spillover effects such as highways, seaports, and renewable energy. The period from now until the end of the year is the "sprint" period, each percentage of credit growth, each billion VND of public investment disbursement, if it goes to the right place, at the right time, will create an immediate spillover effect for the entire economy.

2025 is a test of the capacity to coordinate macro policies. The challenge is not small, but there is room and determination. The problem is to maintain a coordinated rhythm, not letting policies "fall out of sync" halfway. At that time, the Vietnamese economic engine can completely accelerate to the finish line and the growth target of 8.3-8.5% is not impossible.

HA MY

Source: https://www.sggp.org.vn/nhip-doi-chinh-sach-tai-khoa-tien-te-va-muc-tieu-tang-truong-post808237.html