Vietnam central bank eyes 14-15% credit growth in 2023

Credit growth this year is set at 14-15%, subject to adjustments according to actual developments, the State Bank of Vietnam (SBV) said in a directive on goals for the banking sector in 2023.

SBV Governor Nguyen Thi Hong on Tuesday asked credit institutions and branches of foreign banks in Vietnam to strictly implement monetary policy and banking operations to tame inflation, ensure macroeconomic stability, and support suitable economic growth.

Under the directive, the banking sector must proactively and efficiently manage monetary policies in harmony with fiscal policies to control inflation at 4.5% and credit growth at 14-15%.

Second, the sector must control credit growth at a reasonable level, and allocate capital to prioritized areas and economic drivers per the government’s policy like the manufacturing and processing sectors. Credit for risky sectors must be controlled strictly.

Third, the banking sector is requested to drastically implement the project on restructuring the system of credit institutions, along with bad debt settlement, in 2021-2025; curb the bad debt ratio on the balance sheet below 3%; restructure ailing credit institutions and aid them to recover.

In particular, credit institutions are requested to enhance their transparency, address cross-ownership problems in line with the law, while supervision and inspection over credit institutions will be enhanced.

Fourth, the sector must boost non-cash payments and digitalization; and update the legal framework to facilitate new services and products per the demand of citizens and businesses.

Other tasks are ameliorating the legal framework, law enforcement, administrative procedures, business environment, and continuing to implement the sector’s development strategy until 2025 with vision until 2030 efficiently.

Regulators in Vietnam will continue to face global economic headwinds in 2023, including challenges in running monetary policy, according to Pham Chi Quang, director of the SBV's monetary policy department.

For 2023, the central bank’s top priorities are to maintain stability of the local currency and control inflation. The regulator will run the policy in a flexible manner, Quang added.

Vietnam’s credit growth reached 14.5% in 2022, according to the SBV. The country's 2022 inflation was reined in at 3.15% compared with 2021's average, lower than the set target of 4%. This is a very significant result, given that 2022 inflation was estimated at about 5.7% in developed countries and 8.7% in developing and emerging economies.