VietNamNet Bridge – A public debate has begun heating up over whether or not a new stimulus should be launched to prop up the struggling economy and views against the stimulus have been gaining traction.

The National Assembly Economic Committee said in a bulletin on the third-quarter macroeconomic performance that some had cited a slowing economy and a low inflation rate as good reasons for a new stimulus.

A member of the National Financial and Monetary Policy Advisory Council told the Daily that some had been pushing for a massive stimulus package totaling hundreds of thousands of billions of dong to lift up the strained economy.

Even the National Financial Supervisory Commission proposed in a report released earlier this month that the Government take more policy measures to buoy aggregate demand (investment and consumption) to help producers expand operations and thus fuel economic growth from now to next year.

Professor Tran Tho Dat, speaking at a recent seminar organized by the Party Central Committee’s Economic Commission and the NA Economic Committee, threw his weight behind a new stimulus.

However, the NA Economic Committee has urged caution. Inflation is heavily affected by loose monetary and fiscal policies caused by poor economic governance and negative consumer sentiment prompted by protracted macroeconomic instability, according to the committee.

The committee added public debt remained high and tended to rise. It also warned of the possibility that interest groups might influence the process of making and implementing policies for their own benefits but at the expense of the nation.

The committee warned of risks of monetary policy easing designed to stimulate demand as now there is little room for policy intervention.

Former Deputy Prime Minister Vu Khoan showed his backing for the view of the committee. “Given slackened demand at the moment, an increase in supply would just worsen the inventory issue,” he noted.

Vo Tri Thanh, deputy director of the Central Institute for Economic Management (CIEM), said the proposal for a hefty stimulus package was not a strong case as it was in the past because of high risks concerning inflation and policy impacts.

At the Government’s recent news briefing, Vu Duc Dam, minister and chairman of the Government Office, said there would be no new stimulus. Still, the Government is mulling issuing an extra VND58 trillion worth of government bonds to raise funds for construction of national highways 1 and 14 in near future, he noted.

Source: SGT