Institutional reform spurs economic growth

Business conditions in 2018 will be underpinned by a number of favourable

 factors, notably the 29-month improvement of the Manufacturing Purchasing

 Managers’ Index (PMI) (Illustrative image. Source: VNA)

The recommendation was given by the National Financial Supervisory Commission in its recent report updating the economic and financial situation in April 2018.

The report said in the short term, economic growth is being supported by the recovery trend of the economy and the government’s policies to improve business environment.

But in the middle and long run, the country needs further institutional reform to improve economic growth.

The report made positive assessments on the domestic business production in April, which has been the case since the beginning of this year.

It said business conditions in 2018 will be underpinned by a number of favourable factors, notably the 29-month improvement of the Manufacturing Purchasing Managers’ Index (PMI).

The average consumer price index (CPI) in the first four months of 2018 increased 2.8 percent over the same period last year while core inflation was maintained at a stable level, up 1.34 percent.

The report said if strict control is not taken for the roadmap for adjusting up the prices of public services, the CPI growth this year may be higher than the pace in 2017. 

The CPI rise was mainly driven by the hikes in prices of healthcare services (up 16.76 percent), transport (up 5.64 percent), and accommodation and construction material (3.38 percent). 

In the period, more than 46 trillion VND (2 billion USD) from government bonds were mobilised, equivalent to 23.01 percent of the yearly target, the report said, noting a strong drop in the rate of successful bidding from 66.2 percent in March to 37.5 percent in April. 

On the stock market, despite downward adjustments in April following hot growth in the first quarter, there are good signs of foreign investment flow. Since the beginning of 2018, net purchase of shares by foreign investors came to 590 million USD and bonds - 62 million USD. 

They have actively participated in initial public offering (IPO) and share sales of large private companies such as Techcombank, Vinhomes, and Vingroup. 

This showed the confidence of foreign investors in the development prospects of the private economic sector in Vietnam.

Regarding the State budget, the report noted that as of April 15, the State budget surplus stood at 11.3 trillion VND, while in the same period of 2017, budget overspending was 20 trillion VND. 

Debt ratios were within the limit of the National Assembly, with public debt equal to about 55.9 percent of the gross domestic product (GDP), government debt about 47.4 percent, and government-guaranteed debt nearly 8 percent. 

To ensure sustainable budget balance, the National Financial Supervisory Commission suggested continuing to cut regular expenditures, balancing the collection and expenditure for social insurance and building mechanism to encourage more people to join voluntary social insurance, and adjusting the law on public investment to attract buyers of government bonds.

Source: VNA