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January's negative growth can turn positive for the rest of 2015

Update: February, 28/2015 - 09:48
A fall in the January's CPI will enable macroeconomic stability, Dinh Van Nha, Vice Chairman of NA Committee on Financial and Budgetary Affairs, tells Thoi Bao Kinh te Viet Nam (Viet Nam Economic Times).

The year began with an array of declines, including the fall of the Consumer Price Index (CPI) in January and the drop in the price of oil. Should we be happy about this?

There were several factors that contributed to the fall of the CPI in January, and it has been predicted that the figure in February is unlikely to see a turnaround, despite the upcoming Tet (Lunar New Year) holiday this month.

However, there are clear positive factors in this scenario, as well. The drop in CPI is expected to enable the macroeconomic sector to stabilise further, which means more encouraging conditions for banks to lower interest rates again. This, in turn, will help foster a better business climate that enterprises prefer.

In a nutshell, the falling CPI will create favourable conditions for economic growth.

Although, the decrease in the price of oil cannot be considered a positive sign with regard to budget intake, can it?

It is true that the decline in the price of oil affects our budget revenue collection, which can lead to losses amounting to dozens of trillions of dong because crude oil is a major contributor to revenue.

However, given that the national economy has been predicted to grow in 2015—with a favourable investment climate being created by the government's implementation of macro level policy reforms and other reforms in line with resolutions of the National Assembly—it is hoped that production will grow, as well. This will enable us to increase the contributions made by sources other than crude oil to the budget revenue, which will offset the decrease in that made by crude oil and make the situation less worrying.

Moreover, as it is only mid-February, predicting how the oil price will affect the budget intake will be subjective. We should wait until April or May when the results of the budgeting for the first quarter will be available. Only then could an estimation reflect the real situation.

All we can do now is wait and watch and hope that the economy fares well so that the budget can be balanced out. So far, the government has yet to show any inclination towards asking the Standing Committee of the National Assembly, as well as the National Assembly as a whole, whether to make changes to the 2015 budget plan.

Considering the difficulties faced over budget collections in the last few years, is it high time that the budgeting process is supervised substantially, especially by the general public?

Yes, it is. Enhancing and facilitating budget supervision is crucial. This should be done by improving people's understanding of what a budget plan is, how a budget is balanced, and how to monitor budgeting activities. A draft State Budget Law, which is being framed, covers this issue, but relevant provisions are general.

As it is a law, it is acceptable that provisions only stipulate guiding principles and do not go into details. After it is put into practice, the government will issue bylaws that will provide detailed guidance.

For example, when it comes to popularising a budget plan, the government will have to determine ways to make it known to the general public. This could be done through websites of the government and provincial authorities, through publications, or though national media coverage. Whatever is the way, it must ensure easy access for the general public. — VNS

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