The Government proposes not to abolish the Petrol Price Stabilization Fund

The petrol price stabilization fund is a special fund, established before promulgating regulations on price stabilization fund in the Law on Prices. Photo: Thu Dịu

The Government decides which commodities must establish a Price Stabilization Fund

Presenting in detail the price stabilization policy, Minister of Finance Ho Duc Phoc affirmed that the draft Law only stipulates the principle of determining the list of goods and services for price stabilization and assigning the Government to regulate specifically in order to ensure flexibility in the implementation.

Basically, the list of price stabilization goods and services will be reviewed on the basis of inheriting the current list of goods and services and making appropriate adjustments.

The Government's report clearly stated that price stabilization is defined as a mechanism to respond to unusual price fluctuations in certain socio-economic contexts. Therefore, the basic price stabilization measures are inherited as per the current Law, but they will be adjusted according to the policy content.

Accordingly, adjusting and proposing the measure of setting up a price stabilization fund in the group of price stabilization measures with a definite time to stipulate a separate article, to ensure the legality of the implementation of the establishment of the fund in case of necessity for the goods and services on the list.

On that basis, commodities that need to set up a price stabilization fund in order to have a regular and continuous price control tool will be assigned to the Government for making decisions.

In terms of authority, responsibility and organization to implement price stabilization, the draft Law stipulated that, for goods and services that are on the list of price stabilization, if there are signs that fluctuations are too high or too low affecting the socio-economic situation, production and business, market price level, the ministries, sectors and localities shall evaluate in detail and send a document to the Ministry of Finance to summarize and submit to the Government for making a decision.

In the National Assembly's verification report on price stabilization, Chairman of the National Assembly Finance and Budget Committee Nguyen Phu Cuong suggested that it is necessary to complete regulations on the list, criteria for determining the list, measures and responsibility for price stabilization.

Regarding the implementation of price stabilization, the majority of opinions said that the proactive implementation of price stabilization by localities would contribute to keeping prices stable. However, the Government has controls to ensure the consistency of policy orientation, avoid inequality for consumers among localities; avoid taking advantage of the difference in prices between localities to gain illicit profits.

Regarding the List of goods and services to stabilize prices, the Finance and Budget Committee recommended that it should take careful consideration for each item and service, ensuring its inclusivity, reasonableness, and high forecast.

Minister of Finance Ho Duc Phoc. Photo: Quochoi.vn

Petrol price stabilization fund is a "stepping stone" to contribute to price stabilization

Talking about the petrol and oil price stabilization fund, according to the Minister of Finance, although the draft revised Price Law does not stipulate a direct adjustment to the Petroleum Price Stabilization Fund, however, due to the regulations on setting up the oil price stabilization fund, price stabilization in the Law will also have certain effects on the legality of the petroleum price stabilization fund.

Accordingly, the Petroleum Price Stabilization Fund is a special fund, established before the regulations on the price stabilization fund in the Law on Prices. Unlike other financial funds, the Petroleum Price Stabilization Fund was formed and managed for the sole purpose of contributing to stabilizing petrol prices; no organization and no centralized management.

The total annual provision depends on the domestic petroleum consumption output; total usage depends on market movements, inflation control objectives and macroeconomic stability from time to time. In fact, the provisions of the Law on Prices only have a certain effect, in the direction of strengthening the legal basis of the Petroleum Price Stabilization Fund.

Regarding public opinion through reflections from the press, the experts also mentioned that management agencies needed to consider and study the abolishment of the Petroleum Price Stabilization Fund to increase the initiative and flexibility in price adjustment, so that domestic gasoline prices could operate according to world prices.

On that basis, in the draft sent to the public for consulting, there is a proposal to review and evaluate to consider the necessity of the Petroleum Price Stabilization Fund.

However, Minister Ho Duc Phoc said that in recent years, the petrol price stabilization fund has been used consistently for the purpose of stabilizing petrol prices in accordance with the law. The use of the Petroleum Price Stabilization Fund has brought about a positive and effective effect in creating a "stepping stone" to contribute to price stabilization in case of necessity, and flexibility in stabilizing prices in order to stabilize prices. Petrol prices in a period or not for domestic gasoline prices to rise sharply, contributing to curbing inflation, stabilizing the macro-economy, maintaining growth and stabilizing social security.

“Based on a careful assessment, it has been shown that in recent times, the price movement of petroleum products is complicated and difficult to predict, so the price stabilization fund tool is still necessary. Therefore, the Government agreed that in the immediate future, the tool of the Petroleum Price Stabilization Fund should not be abolished. At the same time, strengthening the mechanisms in the implementation to enhance the publicity and transparency in the use of the Fund," the Minister of Finance said.

On that basis, the draft Law on Price stipulates four measures to stabilize prices for a limited time, including regulating and controlling supply and demand; financial and monetary measures; specifying a specific price, maximum price, minimum price or price bracket; applying price support measures in accordance with the provisions of law and international commitments to which Vietnam is a member.

With the above comments, the inspection report of the Finance and Budget Committee said that the majority of opinions agreed with the Government's proposal on the need to maintain the Petroleum Stabilization Fund.

The reason given is that the Stabilization Fund is one of the tools to regulate domestic gasoline prices, an economic measure, not an administrative intervention. In the current reality of Vietnam, the abolishment of the Fund is not appropriate. In fact, when the world gasoline price fluctuates, at some point in time, the Stabilization Fund has played the role of “regulating”, reducing the price fluctuation range, contributing to stabilizing the macro-economy and controlling inflation.

However, the majority of comments also suggested the need for reform. Specifically, the maintenance of the Petroleum Price Stabilization Fund should have a time limit and must operate following the market. The management of the Petroleum Price Stabilization Fund requires more flexibility, efficiency and timeliness.

In the implementation, it is necessary to strengthen management responsibility; promote publicity and transparency; and it should have a strict monitoring mechanism to ensure the efficiency of use.