The State Bank of Vietnam could increase credit growth limits for credit institutions this year or even launch stronger monetary policies to aid the country’s post-pandemic growth, Governor Le Minh Hung has said.

The banking system pledges to supply adequate capital for the economy.
(Photo: tinnhanhchungkhoan.vn) 

Stronger monetary policies could be raised if necessary, he said at a recent  Government meeting.

“The banking system pledges to supply adequate capital for the economy, keep stable foreign exchange rates and is ready for necessary measures to intervene in the market if there were developments threatening macro-economic stability,” Hung said.

“Increasing credit growth limits could be put into consideration. If necessary, stronger policies such as refinancing major projects of key economic sectors could be raised.”

Hung said the central bank was asking credit institutions to cut costs and lower profit targets so lending rates could be decreased to support businesses while the banking system’s operation quality and safety enhanced.

Decree 01 about restructuring loans affected by the pandemic could be revised to create favourable conditions for enterprises.

The central bank’s statistics showed loan payment deadlines were restructured for nearly 260,000 customers with outstanding loans worth nearly VND18 trillion (US$775.8 million). Interest rate cuts and exemptions were offered to more than 421,000 customers to the tune of VND1.3 quadrillion. Banks also provide new loans worth VND1.1 quadrillion to 240,000 customers at rates 0.5-2.5 percentage points lower than pre-pandemic.

Hung said that commercial banks must help enterprises overcome the difficult time together.

Efficiently implementing debt restructuring and lowering the lending rate and loan expenses was an important factor to maintain the confidence of investors in the Vietnamese economy and to attract investment, Hung said.

Regarding the demand for credit, he said credit growth was modest in April and May at just 0.12% and 0.53% respectively due to the impacts of the pandemic. However, credit growth expanded faster in June, at the rate of 1.28%. As of June 29, credit growth expanded at 3.26%.

Hung also said foreign exchange rates were kept stable in the first half of this year, with a devaluation of about 0.2-0.3%, which together with a record foreign currency reserve contributed largely to controlling inflation.

At the meeting, Prime Minister Nguyen Xuan Phuc asked the central bank to have more flexible and effective monetary policies to stimulate demand and economic growth, at the same time to maintain macroeconomic stability, control inflation and consolidate the confidence of investors.

PM Phuc stressed Vietnam would not tighten monetary policies this year, aiming for credit growth to expand by at least 10%.