The world situation in 2016 will fluctuate unpredictably and will affect Vietnam's finances.

In 2016, the world situation will be unpredictable. Oil and gas prices are forecast to continue to decrease in the coming time because world demand does not increase while the Organization of Petroleum Exporting Countries (OPEC) does not reduce supply... In other words, oil is a big problem in the world, causing world economic growth to decline. Along with that, fluctuations from the Chinese economy continue to spread and affect other markets. Not to mention the world is full of complicated and intricate relationships such as military fluctuations in the Middle East, Russia, Türkiye, self-proclaimed Islamic groups..., all of which will impact the world economy. And Vietnam cannot be at ease with those fluctuations because they will certainly impact Vietnam's finances.

2016: Focus on signed agreements

First, a very important issue at present is the Trans-Pacific Partnership Agreement (TPP). A few weeks ago, the countries signed a document with each other, however, this document is not yet legally binding, it is only a memorandum of understanding. The countries will bring this memorandum of understanding back to their countries and submit it to the National Assembly for ratification. Therefore, we should not think that having this memorandum of understanding is considered finished. Because even in the US, the US government has not yet submitted the draft to the National Assembly, let alone agreed or made any amendments. Especially, this is the year of the US presidential election and the candidates for important positions in the White House are all "against" the TPP. So it is certain that this year they will not bring the TPP to the National Assembly for discussion. Therefore, in the US, it will take another two years for this draft to be submitted to the National Assembly and then the National Assembly of the member countries to ratify it, but it is not certain that all the decisions in the draft will survive or that there will be other changes.

So at this time, we should not push the belief in TPP too much and promote TPP as a medicine, a breakthrough direction for Vietnam’s economy. This is even dangerous because many people will think that TPP is already here, marathon projects and invest…

Of course, I hope that Vietnam joins the TPP to change, innovate and truly integrate, but the road is still far away. So at this time, this year, we should focus on what we have, rather than things that are far away. As for the integration issue, we should focus on existing agreements and existing markets.

Vietnam is still far from the required level in terms of integration. Illustration photo: HTD

Second, the problem of high public debt and increasing budget deficit will give us a headache. Suppose the oil price drops to 30 USD/barrel, it will greatly affect budget revenue and expenditure. Many experts also say that we must change the system by shortening administrative procedures... But saying that is only talking about the superficial phenomenon of the Vietnamese economy. We need to be more specific, for example, changing the role of state-owned enterprises, screening public investment projects and the financial sector must also be promoted to truly integrate. As it is now, many countries have not recognized Vietnam as a market economy. Vietnam is still far from the required level in terms of integration.

In 2016, Vietnam continued to face pressure from exchange rates. The exchange rate was relatively stable in the first two months of the year, but as 2016 progressed, pressure continued to weigh on the exchange rate.

Bankruptcy issue should be raised

Regarding the banking issue, this year we will continue to deal with weak banks. It is also time to bring up the issue of bank bankruptcy because it is a normal thing in a market economy. We should not think that bank bankruptcy will lead to a system collapse because we can certainly control it completely. And people who deposit money in banks and let them go bankrupt will not lose money. In many countries like the US, dozens of banks can go bankrupt every month but the system will not collapse. If the State Bank (SBV) had to buy Construction Bank, Oceanbank... for 0 VND, instead of SBV buying, it can let them go bankrupt. With the money mobilized from people at those banks, it will be transferred to another bank. That means people's deposits are just transferred from one bank to another, so there is no fear of people withdrawing money. The issue of bankruptcy should be raised as soon as possible.

This year, we need to take more drastic measures in economic management and the financial and banking sectors in particular. Because this will be a year when we face many external fluctuations, we need to accept them, prepare for them appropriately and not be too optimistic.

First of all, we must continue to control inflation and growth well. The State Bank has also introduced a central exchange rate mechanism to operate more flexibly, but it needs to operate more appropriately and closely with the market. If it is necessary to adjust prices strongly to support exports, it should still be done.

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