violet_salem
New Member
Textbook economists are nervous about Vietnam''s fixed exchange rate and twin deficits in the current account and fiscal budget. With prime economic growth built on foreign investment and capital imports, and a projected current account deficit at 6.9% of GDP yoy, the government''s commitment to currency stability limits act as a noose on monetary policy. SBV cannot cheapen the currency with lower interest rates without affecting the exchange rate, meaning that either growth gives out or the currency goes to pot, leading to the classic emerging markets crisis. In lieu of foreign capital inflows, the government could finance growth - if only the fiscal position was in surplus.
Vietnam tends to run budget deficits of 5% of GDP; a notable 7% when including off budget spending. However, basing analysis on planned spending is to apply a heavy dose of optimism. According to IFS data, the State was sitting on US$4.5bn of fiscal reserve cash deposits in Nov 2008, with the stimulus programme bringing them to a low of US$1.7bn by Jun 2009. Given 9M09''s actual fiscal deficit of 4.1% of GDP compared to 4.8% projected, 2009 fiscal deficit might be well below the 6.9% forecast. To avoid blowing-out forex, the State opted to amp up credit with a US$1bn subsidy package, financed by government deposits. It was a fiscal stimulus with monetary characteristics, and a tactic not found in any textbook. Underlying this manoeuvre were brighter budget revenue forecasts in 2010, based on VAT accounting for 30% of government revenues reverting back to 10% (5% under the stimulus programme) and increased oil production. With the programme proving a success, the second credit stimulus was approved albeit at a smaller size and largely financed by undisbursed funding from the first package. The recent gifting of low interest stimulus support from the ADB, Japan, and possibly the World Bank will also serve to prop-up the State''s position by another US$1-2bn, assisting the State''s efforts bridge finance growth (and imports) until private capital flows thaw.
''Stimulus support'' seems more appropriate for these programs than ''currency support'' given the IMF released forex reserves numbers at US$19bn in Jul 2009 versus the US$17bn quoted in the press. SBV''s US$ are largely intact because Vietnam is one of the few countries not Mugabe-ing the deficit. That currency remains weak stems from slow foreign inflows and strong domestic sentiment for gold. Bottom line: a textbook can get you very lost in the economic jungles of Vietnam; but guerrillas call this opportunity.
Các chim lợn trình còi vào đọc để biết về tình trạng thâm hụt tài chính dưới mức dự báo, về gói kích thích thứ 2, về nguồn vốn hỗ trợ từ ADB, Nhật và World Bank, về tăng trưởng tài chính và chính sách ngoại hối của VN.
Link gốc xem ở đây:
http://ket-noi.com/forum//f_319/1216868/trang-6.ttvn
Vietnam tends to run budget deficits of 5% of GDP; a notable 7% when including off budget spending. However, basing analysis on planned spending is to apply a heavy dose of optimism. According to IFS data, the State was sitting on US$4.5bn of fiscal reserve cash deposits in Nov 2008, with the stimulus programme bringing them to a low of US$1.7bn by Jun 2009. Given 9M09''s actual fiscal deficit of 4.1% of GDP compared to 4.8% projected, 2009 fiscal deficit might be well below the 6.9% forecast. To avoid blowing-out forex, the State opted to amp up credit with a US$1bn subsidy package, financed by government deposits. It was a fiscal stimulus with monetary characteristics, and a tactic not found in any textbook. Underlying this manoeuvre were brighter budget revenue forecasts in 2010, based on VAT accounting for 30% of government revenues reverting back to 10% (5% under the stimulus programme) and increased oil production. With the programme proving a success, the second credit stimulus was approved albeit at a smaller size and largely financed by undisbursed funding from the first package. The recent gifting of low interest stimulus support from the ADB, Japan, and possibly the World Bank will also serve to prop-up the State''s position by another US$1-2bn, assisting the State''s efforts bridge finance growth (and imports) until private capital flows thaw.
''Stimulus support'' seems more appropriate for these programs than ''currency support'' given the IMF released forex reserves numbers at US$19bn in Jul 2009 versus the US$17bn quoted in the press. SBV''s US$ are largely intact because Vietnam is one of the few countries not Mugabe-ing the deficit. That currency remains weak stems from slow foreign inflows and strong domestic sentiment for gold. Bottom line: a textbook can get you very lost in the economic jungles of Vietnam; but guerrillas call this opportunity.
Các chim lợn trình còi vào đọc để biết về tình trạng thâm hụt tài chính dưới mức dự báo, về gói kích thích thứ 2, về nguồn vốn hỗ trợ từ ADB, Nhật và World Bank, về tăng trưởng tài chính và chính sách ngoại hối của VN.
Link gốc xem ở đây:
http://ket-noi.com/forum//f_319/1216868/trang-6.ttvn