Vietnam plans $82 bln credit injection in 2024

Credit institutions in Vietnam are expected to pump around VND2,000 trillion ($82 billion) into the economy this year, or a 15% credit expansion, the central bank estimates.

Addressing a Wednesday press conference organized by the State Bank of Vietnam (SBV), Deputy Governor Dao Minh Tu said credit growth can be expanded further to 16% in 2024 to meet financial needs as long as macroeconomic balances are guaranteed.

He said total outstanding loans in the banking system increased 13.5% last year to nearly VN13,600 trillion (circa $557.72 billion).

The final figure was a surprise as total lending had expanded just 11.09% in the year through December 21.

The 2023 credit growth was slightly lower than the targeted 14.5%, but it can be seen as a positive development in the context of economic hardships, Tu said. Around VND1,300 trillion ($53.31 billion) was injected into the economy last year, he added.

Tu recalled that the SBV cut its policy rates four times in 2023 with a combined decrease of two percentage points amid global interest rate hikes.

“Interest rates on deposits and new loans have dropped by over two percentage points against the end of 2022. Lending rates have been lowered to the lowest over the past two decades.”

He said that the SBV will likely continue to cut rates if conditions allow, emphasizing that rate reductions were not being considered at the moment for 2024.

To facilitate proactive measures by banks, the central bank has assigned a fixed credit quota for each bank for the whole of 2024. In the past, the central bank used to set limits for shorter periods and banks would ask for the cap to be raised after their quota was fulfilled.

The SBV has said that domestic banks cannot breach their respective ceilings at any time during the year, while foreign banks must ensure that they have exceed their quotas by the end of the year.

Vietnam’s GDP grew by an estimated 5.05% in 2023 to $430 billion. The National Assembly, Vietnam's parliament, has set an economic growth target of 6-6.5% for this year.