Monetary and fiscal policies some problems of coordination

Abstract

The Vietnam's government, in its socioeconomic development plan for 2013, confirms the following overall targets: macroeconomic stability, a lower inflation rate, a higher growth rate, promotion of three strategic breakthroughs associated with restructuring of the economy, and a new economic growth model to ensure social security and welfare, higher efficiency in diplomatic activities and international integration, national defense, and sociopolitical stability at the service of sustainable economic development in upcoming years. Accordingly, GDP is expected to rise by 5.5%; export turnover goes up by some 10%; the trade gap is pegged at the 8% level, budget overspend is kept at 4.8% of GDP at most, CPI increases by 8%, the gross investment equals 30% of GDP; the ratio of poor households reduces by 2% and the ratio of poor localities decreases by 4%. The government also indicates a need to coordinate fiscal and monetary policies to curb inflation, enhance the macroeconomic stability, settle setbacks, enable enterprises to access sources of capital, cool down the interest rate in conformity with reduction in inflation rate, and encourage commercial banks to extend low-interest loans to the fields of agriculture and export production. The present paper is based on the theories of relationship between fiscal and monetary policies to indicate aspects that need coordination when implementing these two policies in Vietnam at present to carry out effectively Governmental Resolution concerning the 2013 socioeconomic development.