FACTS

Monetary policy in Vietnam during COVID-19

I. Throughout the year of 2020:

The global picture in 2020 got off to a bleak start with the rapidly spreading outbreak
of the Covid-19 pandemic, which followed the most severe global recession since the
Great Recession of 1929-1933. In addition to human damage, due to social isolation
and blockade, the epidemic has crippled many global economic, trade and investment
activities; cross-border transactions fell sharply, the unemployment rate rose suddenly,
fracturing global supply chains. According to IMF, the global economy in 2020
narrowed to -3.5%, a recession more severe than the global financial crisis of 2008 -
2009 (down -0.1%), especially in developed countries.

Vietnam is not an exception from this phenomenon. Two Covid-19 outbreaks have
had a direct and far-reaching impact on many aspects of economic and social life;
production and business stagnation, many economic, cultural and social activities are
seriously affected, especially in the fields of transportation services, tourism,
restaurants, hotels, entertainment and so on; millions of workers are becoming
unemployment and workers' incomes are severely reduced.

By changing monetary policy in a reasonable way, our country has overcome

difficulties to, successfully implement the "dual goal": Both to prevent and control the
Covid-19 pandemic, to recover, develop the economy and ensure people's lives. As a
result, in 2020, the macro foundation is maintained stable, the average inflation is
controlled at 3.23%, the large balance of the economy is guaranteed. Economic
growth reached 2.91%, among the highest-performing countries in the region and the
world amid a severe global downturn. This trend continued in the first months of
2021, according to which production continued to recover positively with the
industrial production index in the first 2 months of 2021 increasing by 7.4% over the
same period in 2020, in which the processing and manufacturing industry increased by
10.4%; investment from the State budget reached 9% of the plan, which is the highest
progress in the last 5 years; FDI investment increased by 2%; exports and imports
increased sharply by 23.2% and 25.9% over the same period in 2020.

The above outstanding results have a significant contribution of the Banking system.
Monetary and credit solutions to support businesses and people in responding to the
above-mentioned shocks have been actively and timely implemented by the State
Bank, making important contributions in achieving the goal of controlling inflation,
strengthening the macro foundation, maintaining a healthy business environment,
supporting the momentum of economic growth recovery. Specifically:

Firstly, operating in sync, flexibly operating monetary policy tools to stabilize the
market, control inflation and support the economy to respond to the unfavorable
impact of the Covid-19 pandemic.

Secondly, continuously adjust the reduction of interest rates on a large scale, to

support the economy.

Thirdly, operating and announcing flexible central exchange rates daily, in line with
domestic and foreign markets, macroeconomic balance, currency and monetary policy
objectives; contributing to limiting the state of foreign currency trading and absorbing
shocks to the economy.

Positive results on macro stability, financial and monetary markets, creating a

favorable business environment, supporting the removal of difficulties for the
economy ... showed that the solutions implemented by the Banking sector in the past
time are in the right direction, having practical effects on businesses and people.
However, the world market is still unusually volatile, especially the Covid-19
pandemic, natural disasters, unpredictable epidemics continue to negatively affect the
domestic economy and banking system, economic growth is low (although singular in
countries with positive growth), inflation is still under unpredictable pressure from
world prices, bad debt pressures the banking system increases from the impact of the
pandemic ... are enormous challenges for the banking industry in the near future.

II. The predictions of 2021:

In 2021, the world economy is forecasted to recover faster than expected due to the
rapid progress of covid-19 vaccination and the adaptation to the epidemic of
economies, international organizations forecast that the world economy in 2021 will
grow by 4.0 - 5.6%. International organizations forecast that Vietnam's economy in
2021 is among the countries with high growth rates compared to the region and the
world, from 6.1 - 8.6%. However, our forecast continues to face many difficulties and
challenges. Unpredictable developments of domestic and foreign epidemics, along
with the re- application of controls and blockades, can negatively affect the economic
outlook in 2021.

In the context of opportunities, advantages, difficulties, intertwined challenges,

inheriting important and comprehensive achievements achieved in 2020 and previous
years, the management of monetary policy and banking activities in 2021 will closely
follow the developments at home and abroad. At the same time, the State Bank will
continue to be proactive, flexible, and make efforts to join hands with ministries and
sectors to support the resilient economy to overcome the pandemic, stabilize the
macroeconomics and inflation, creating a healthy business environment.