Boost credit growth, meet 15% target: PM to central bank

Prime Minister Pham Minh Chinh has requested the State Bank of Vietnam (SBV) to work out measures for accelerating credit growth to overcome a sluggish start and meet the year’s 15% target.

At a Monday meeting with SBV leaders and several government agencies, Chinh also called for continuation of the proactive, flexible, and opportune monetary policy that has proven effective recently.

After a contracton in the first two months of this year, lending rebounded late March and grew 6% in H1/2024. At the end of July, total outstanding loans expanded 14.99% year-on-year and 5.66% from end-2023 to VND14,330 trillion ($570 billion).

Credit increased 13.71% last year, or an additional VND1,500 trillion ($59.67 billion) was injected into the local economy, SBV Deputy Governor Dao Minh Tu had said in January.

Recognizing headwinds to the management of the monetary policy like strong inflationary pressure, upward interest rates, high forex demand, and risks from global geopolitical tensions, the PM asked the central bank to funnel lending into production and business, including both traditional and new growth drivers.

He also asked the SBV to exert good control over the gold and forex markets, speed up handling of toxic loans, and effectively revamp ailing banks.

Chinh welcomed the SBV’s proposal to increase the size of the soft loan package for development of social and affordable housing to VND140 trillion ($5.6 billion) from the current VND120 trillion, offering longer terms and lower interest rates.

He asked the Ministries of Industry and Trade, Planning and Investment, and Foreign Affairs to ramp up exports, striving for a record high turnover of $750-800 billion and a trade surplus of over $20 billion this year.

He said they should work to expand payment settlement in domestic currencies with trade partners and make effective use of enacted free trade agreements (FTAs) while negotiating new ones.