Vietnam : Potential Policies Responses to the COVID-19 Epidemic

Because of the growing economic costs associated with the coronavirus epidemic, many Governments announced a set of new policy measures aimed at mitigating the potential impacts. This note aims to support the Vietnamese Government in its effort to design and implement the most cost-effective package of policy responses. Based on lessons from international experience and on our existing dialogue with the authorities, the recommendation is to adopt a three-step strategy. The first step will focus on supporting the most affected sectors through the combination of targeted tax and financial measures as well as assistance to the most vulnerable firms and employees. The second step will complement the above measures through the accelerated implementation of the public investment program, which will become more effective on the aggregate demand when most restrictions on people's mobility will have been removed. The third step is to take opportunity of the current crisis, by encouraging priority reforms in the development of a digital economy and the further integration of the Vietnamese economy in global value chains by taking advantage of the diversification needs by multinationals that may want to go away from China