Vietnam Mulls $15.2 Billion in Aid For Covid-Hit Economy

(Bloomberg) -- Vietnam's government is seeking 347 trillion dong ($15.2 billion) in stimulus to lift an economy hobbled by the widespread outbreak of Covid-19, a significantly slimmed down proposal that nonetheless looks to assist businesses, workers and increase infrastructure spending.

The measure includes 176 trillion dong in infrastructure projects for 2022-23, Planning and Investment Minister Nguyen Chi Dung told the National Assembly, which is holding a special session in Hanoi to consider stimulus measures. The government is proposing increasing the state budget deficit by 240 trillion dong for the period, he said.

Officials seek to mend an economy damaged by tough anti-virus lockdowns, which led to factory closures that crippled global supply chains.

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Vietnam's economy expanded at 2.58% in 2021, the slowest since at least 2005 when Bloomberg started tracking the data. Economic growth is expected to accelerate in 2022, with momentum coming from the travel and tourist industries, increasing domestic consumption and government stimulus measures, Le Trung Hieu, head of the GDP department of the General Statistics Office, said late last month.

Policymakers in November were weighing 800 trillion dong in stimulus measures.

The stimulus package includes measures to reduce bank loan interest rates by about 1 percentage point and delay loan payments to help businesses, according to a plan submitted to legislators. The central bank will intervene in the money market by selling dollars to stabilize foreign exchange rates when needed, according to the proposal, which also includes a plan to sell $3 billion of government bonds domestically.

The package seeks 110 trillion dong in assistance to enterprises, household businesses and cooperatives and 53.15 trillion dong in support for workers as well as a continuation of tax breaks, tax reductions and tax exemptions for businesses.