The debate over 'what to do with 1 trillion dong in cash sitting idle in banks'

Members of Parliament argue that instead of allocating 1 trillion VND in surplus funds to support workers, this capital should be channeled into projects that boost the economy .

The national treasury currently has over 1 trillion VND in surplus as of May 2023. During a discussion on May 31st, Mr. Tran Anh Tuan, Head of the Ho Chi Minh City Enterprise Management Innovation Board, proposed "flexible arrangements to immediately support unemployed workers; or building rental housing in export processing zones and industrial parks, and providing training and retraining for workers." Mr. Tuan argued that this solution would immediately stimulate the economy.

During this morning's discussion session, Mr. Ha Sy Dong, Vice Chairman of the Quang Tri Provincial People's Committee, shared Mr. Tuan's impatience and agreed that the funds currently held in the budget should be used flexibly.

However, Mr. Dong argued that flexibility lies in coordinating monetary and fiscal policies and streamlining administrative procedures to direct funds to the right places, namely important projects that boost the economy. "If projects that are already being prepared for investment and require this funding are not provided for, this waste might lead to further waste," he said.

Mr. Ha Sy Dong, Vice Chairman of the People's Committee of Quang Tri Province. Photo: Hoang Phong

The current mechanism allows the State Treasury to optimize temporarily idle capital, but Mr. Ha Sy Dong raised concerns about the lack of effective coordination between fiscal and monetary policies in prioritizing the current goal of reducing lending interest rates in the economy.

"Does the setting of bidding prices and projected bidding volumes take into account operational objectives regarding the liquidity of the banking system, as well as the level of capital costs in the money market that the State Bank of Vietnam is pursuing?", the Vice Chairman of the Quang Tri Provincial People's Committee questioned, and requested that members of the Government provide a satisfactory answer to resolve the difficulties facing the economy.

Explaining the budget surplus, Minister of Finance Ho Duc Phoc stated that the agency is depositing 895,000 billion VND at an annual interest rate of 0.8% at the State Bank of Vietnam and 130,000 billion VND in short-term deposits at commercial banks. He explained that this is temporary idle capital, already included in the budget approved by the National Assembly for public investment projects and national target programs.

"This money has been allocated in detail for the projects. The surplus is due to unused funds that have not been fully disbursed, not because it's being set aside or allocated for other purposes," Mr. Phớc said.

Speaking on the sidelines of the National Assembly on May 26, Mr. Tran Van Lam, Standing Member of the Finance and Budget Committee, stated that the accumulation of over one trillion dong in the treasury is wasteful, and the delay in injecting it into the economy is causing a loss of momentum. However, he noted that despite the impatience, money should not be "pushed" out at all costs, but rather a step-by-step, rigorous, and effective approach is needed.

"If spending money leads to even greater losses and waste, it would be even more regrettable. We cannot rush to extreme solutions; instead, we need to be cautious to avoid further losses and waste," he analyzed.

Public investment – ​​considered a driving force for private investment development – ​​is currently experiencing very low disbursement rates. According to a report by the Ministry of Finance, the disbursement rate of public investment capital in the first four months reached nearly 14.7% of the annual plan. This is only about 15.7% of the plan assigned by the Prime Minister and lower than the same period in 2022 (18.48%). According to the Law on Public Investment, funds may be allocated to a project, but delays in the project preparation phase will hinder subsequent stages, such as capital disbursement.

Minister Ho Duc Phoc believes that the law must be amended, possibly using one law to amend multiple laws, and that amending the Law on Public Investment is necessary to address this situation.

Mr. Minh

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