In the first half of 2014, lending rose by 3.52 percent compared withthe same period last year. Although it fell short of expectations, thereis still hope that the credit growth target for the whole year can beachieved, given the economy is showing signs of recovery.
Deputy Governor of the State Bank of Vietnam (SBV) Nguyen Dong Tien spoke with Nhan Dan (People) newspaper about the issue.
*What do you think about the results achieved by the SBV and the banking system in the first half of the year?
Basedon the National Assembly and Government goals of maintainingmacroeconomic stability, curbing inflation, achieving reasonable growthand improving the competitiveness of the economy, since the early monthsof the year, the SBV has proactively employed a synchronous set ofmonetary instruments to regulate the money supply, in order to controlinflation, support liquidity of credit institutions and stabilise thecurrency market.
The SBV also adjusted the exchange rate in linewith developments of foreign currency supply and demand, raising theexchange rate by 1 percent to help stimulate exports as well ascontinuing measures aimed at removing difficulties for enterprises,facilitating credit institutions’ efforts to boost their lending andresolve bad debts.
In general, the currency market and bankingactivities in the first half of 2014 underwent positive and stabledevelopments in accordance with SBV orientations. Inflation was kept at alow level, as consumer prices in June rose by 1.38 percent against theend of 2013 and 4.98 percent compared with a year earlier. The one-monthprice gain in June was the smallest in 13 years.
The liquidityof the credit institution system was ensured and improved. The averagedeposit and lending rates dropped by 0.5 – 1.5 percentage pointscompared with the end of 2013 and were equal to those during the2005-2006 period. Exchange rates, the foreign currency and gold marketwere stable. In the first six months of the year, the SBV purchased alarge amount of foreign currency to increase foreign reserves to arecord 35 billion USD.
Large foreign reserves enabled the SBV toregulate the exchange rate and foreign currency market in a moreproactive and effective way. Measures to tackle bad debt through theVietnam Asset Management Company began to produce results. In addition,the SBV’s monetary policy continued to receive public support, thanks toeffective communications through the mass media.
*Despite these achievements, it is undeniable that credit growth was still slow. What do you think about this?
Inthe early months of 2014, the economy showed signs of improvements butmany enterprises were still struggling. At the end of June 2014, lendingrose by a modest 3.52 percent over the end of 2013, which wasattributed to seasonality, weak demand from enterprises which did notdare to borrow due to slow sales of their products and reduced profits.
Inaddition, Vietnam’s key exports were affected by slow global economicrecovery and instability in some regions of the world. Moreover,management and financial capacity of Vietnam’s small and mediumenterprises has yet to improve, which made them ineligible for borrowingfrom banks.
Therefore in order to boost credit to the economy,there should be greater collaboration between different macroeconomicpolicies and specific measures to support enterprises, in addition tothe banking sector’s effort.
However, we should recognise thatcredit growth was accelerating in recent months. Positive economic datashowed that production was recovering and credit growth is expected topick up in the final months of the year. So it is highly likely thatVietnam can achieve its credit growth target of 12-14 percent for thewhole year.
*Since the start of the year, the banking sector hasimplemented a range of measures to boost credit growth, some of whichare loan programmes for construction projects and agriculturalproduction. Can we expect these measures to help accelerate creditgrowth so that the target of 12-14 percent can be achieved?
Loanprogrammes for property development and agricultural production havegreat significance to the economy for the time being. For the propertysector, the programme will help boost sales of properties andconstruction materials. So far BIDV, SHB and Vietinbank have pledged tolend over 6 trillion VND (282 million USD) to construction and roadprojects.
For agricultural production, the programme willencourage cooperation between farmers and traders, deployment ofadvanced technology and large-scale production as well as an exportboost. So far there have been 11 agricultural projects eligible for bankloans and the amount pledged by banks was estimated at 2.7 trillion VND(127 million USD).
It can be said that these lending programmesare not only drastic measures that the banking sector has beenimplementing to achieve the 2014 credit growth target, but also reflectthe banking sector’s consistent orientations in implementing creditpolicies to support sustainable economic development and strengthencollaboration between credit institutions in controlling the money flow,enhancing the quality of credit and reducing bad debt.-VNA
Deputy Governor of the State Bank of Vietnam (SBV) Nguyen Dong Tien spoke with Nhan Dan (People) newspaper about the issue.
*What do you think about the results achieved by the SBV and the banking system in the first half of the year?
Basedon the National Assembly and Government goals of maintainingmacroeconomic stability, curbing inflation, achieving reasonable growthand improving the competitiveness of the economy, since the early monthsof the year, the SBV has proactively employed a synchronous set ofmonetary instruments to regulate the money supply, in order to controlinflation, support liquidity of credit institutions and stabilise thecurrency market.
The SBV also adjusted the exchange rate in linewith developments of foreign currency supply and demand, raising theexchange rate by 1 percent to help stimulate exports as well ascontinuing measures aimed at removing difficulties for enterprises,facilitating credit institutions’ efforts to boost their lending andresolve bad debts.
In general, the currency market and bankingactivities in the first half of 2014 underwent positive and stabledevelopments in accordance with SBV orientations. Inflation was kept at alow level, as consumer prices in June rose by 1.38 percent against theend of 2013 and 4.98 percent compared with a year earlier. The one-monthprice gain in June was the smallest in 13 years.
The liquidityof the credit institution system was ensured and improved. The averagedeposit and lending rates dropped by 0.5 – 1.5 percentage pointscompared with the end of 2013 and were equal to those during the2005-2006 period. Exchange rates, the foreign currency and gold marketwere stable. In the first six months of the year, the SBV purchased alarge amount of foreign currency to increase foreign reserves to arecord 35 billion USD.
Large foreign reserves enabled the SBV toregulate the exchange rate and foreign currency market in a moreproactive and effective way. Measures to tackle bad debt through theVietnam Asset Management Company began to produce results. In addition,the SBV’s monetary policy continued to receive public support, thanks toeffective communications through the mass media.
*Despite these achievements, it is undeniable that credit growth was still slow. What do you think about this?
Inthe early months of 2014, the economy showed signs of improvements butmany enterprises were still struggling. At the end of June 2014, lendingrose by a modest 3.52 percent over the end of 2013, which wasattributed to seasonality, weak demand from enterprises which did notdare to borrow due to slow sales of their products and reduced profits.
Inaddition, Vietnam’s key exports were affected by slow global economicrecovery and instability in some regions of the world. Moreover,management and financial capacity of Vietnam’s small and mediumenterprises has yet to improve, which made them ineligible for borrowingfrom banks.
Therefore in order to boost credit to the economy,there should be greater collaboration between different macroeconomicpolicies and specific measures to support enterprises, in addition tothe banking sector’s effort.
However, we should recognise thatcredit growth was accelerating in recent months. Positive economic datashowed that production was recovering and credit growth is expected topick up in the final months of the year. So it is highly likely thatVietnam can achieve its credit growth target of 12-14 percent for thewhole year.
*Since the start of the year, the banking sector hasimplemented a range of measures to boost credit growth, some of whichare loan programmes for construction projects and agriculturalproduction. Can we expect these measures to help accelerate creditgrowth so that the target of 12-14 percent can be achieved?
Loanprogrammes for property development and agricultural production havegreat significance to the economy for the time being. For the propertysector, the programme will help boost sales of properties andconstruction materials. So far BIDV, SHB and Vietinbank have pledged tolend over 6 trillion VND (282 million USD) to construction and roadprojects.
For agricultural production, the programme willencourage cooperation between farmers and traders, deployment ofadvanced technology and large-scale production as well as an exportboost. So far there have been 11 agricultural projects eligible for bankloans and the amount pledged by banks was estimated at 2.7 trillion VND(127 million USD).
It can be said that these lending programmesare not only drastic measures that the banking sector has beenimplementing to achieve the 2014 credit growth target, but also reflectthe banking sector’s consistent orientations in implementing creditpolicies to support sustainable economic development and strengthencollaboration between credit institutions in controlling the money flow,enhancing the quality of credit and reducing bad debt.-VNA
