Nguyen Thi Hong, Governor of the State Bank of Vietnam, delivered a report to the National Assembly during a meeting in Hanoi on May 24. (Photo: VNA) Theprogramme, issued under Government Decree 42 in 2017, was set to be extendeduntil the end of 2023.
Theprogramme, since its implementation five years ago, has contributed to therestructuring of numerous financial institutions and the collection of bad debtduring the 2016-2020 period, according to Nguyen Thi Hong, Governor of theState Bank of Vietnam (SBV).
By the endof 2021, the programme had helped handle over 380 trillion VND in bad debt, or47.9 percent of the country's entire bad debt since August 15, 2017. Onaverage, some 5.67 trillion VND in bad debt was processed each month during theperiod, significantly higher than the 3.25 trillion VND per month prior to theimplementation of the programme.
Theprogramme had helped recover 148 trillion VND or 38.94 percent of all bad debtamong financial institutions, a marked improvement over the yearly average of22.8 percent during the 2012-2017 period.
A recent SBVreport said the bad debt ratio among financial institutions was maintained atunder 2 percent, below the 3 percent target of Decree 42, which has producedpositive impacts on the country's financial sector in terms of managementcapacity and quality of services.
Meanwhile,the Vietnam Asset Management Company (VAMC) has auctioned assets and recoveredmore than 77.2 trillion VND in the last five years.
According tothe SBV, the global economy is to remain turbulent due to high inflation, theCOVID-19 pandemic and geopolitical conflicts in the 2021-2025 period, whichwill likely result in rising bad debt among Vietnamese businesses.
Aconservative estimate by the SBV showed the country's potential bad debt ratioat 6.31 percent. Unresolved bad debt by the end of last year stayed at 412.7trillion VND, a problem made worse by the pandemic.
In light ofrecent events, Hong asked the National Assembly for an extension to Decree 42to avoid a policy shortfall that hinders SBV and VAMC to process and resolvebad debt and potentially creates numerous legal complications for financialinstitutions and customers.
"Thegovernment highly recommends policymakers to conduct further studies andreviews to turn Decree 42 into permanent laws, to be presented to the NationalAssembly no later than 2023," said the Governor.
She said thecentral bank's top priority in the near future is to further improve thefinancial sector's resilience and security, especially in support of largeinfrastructure and transportation projects./.
VNA
