Despite significant improvement, credit is unlikely to reach the 12percent growth target this year. Economists are worried that the slowgrowth in 2013 would continue in 2014. For this reason, economic expertshave offered proposals, regarding monetary policy for 2014. Report byVietnam Economic News.
Credit needs to grow by just 10 percent in 2014?
The State Bank of Vietnam’s Money Policy Department Director NguyenThi Hong said, “The 12 percent credit growth target for this year can beadjusted to match realities. The credit growth has reached 7.18 percentso far this year and is expected to increase to 10-11 percent by theyear’s end given that credit usually increases rapidly in the lastmonths of the year. The State Bank will flexibly adjust credit growthtargets for high-performing credit institutions and quickly resolve baddebts via the Vietnam Assets Management Company (VAMC).”
It is expected that the macro economy will improve in 2014 as a resultof economic recovery. However, many economic experts warned ofinflation again next year as a result of economic growth measures andthe budget overspending rate increase to 5.3 percent.
They also said that businesses will still face difficulties and thatto reach the economic growth rate of 5.8 percent next year, ministriesand sectors need to take comprehensive measures to boost credit flowsinto the economy.
Small and Medium EnterprisesAssociation Chairman Dr. Cao Si Kiem said that the State Bank of Vietnamhas put in place money policy tools under the market principle, whileensuring publicity and transparency, which has received good responsefrom the society, businesses and investors. However, systematicsolutions are also needed to resolve problems, particularly bad debts.
Economist Dr Vu Dinh Anh said, “The macro economywill not change drastically next year and it will be ok to continue themoney policy. The government should not loosen the money policy and setthe credit growth rate of 12 percent. It is reasonable to increasecredit by only 10 percent in 2014-2015 since both banks and businesseshave realised their difficulties.”
“The mostimportant thing for the Vietnamese credit system is not to grow but toimprove the quality of credit and resolve bad debts, particularly stopnew bad debts. In case that credit standards are loosened, the amount ofbad debts will increase within three to six months," he stressed.
Temporarily using profits to resolve bad debts
Many said that the money policy still need to be flexible and stableand the struggle with bad debts should be accelerated. NationalFinancial Monitoring Committee Deputy Chairman Truong Van Phuoc saidthat resolving bad debts meant that credit will be reduced and that thecredit growth rate could be lowered to 9 percent. “We have used profitsfor the next three years to resolve national bad debts,” he said.
HSBC Vietnam General Director Summit Dutta said that establishing abad debt management authority is a good solution in the currentsituation. Dr. Cao Si Kiem also said that resolving bad debts shouldstill be a major task for next year. Without this, businesses will beunlikely to recover and banks will be unlikely to become stable.
Business Development Research Institute Director Dr. Le Xuan Nghiasaid that if banks resolve their bad debts, the credit growth rate willincrease to 14-15 percent in the near future.
Healso suggested that the State Bank of Vietnam pay special attention toresolving bad debts, strengthening international-standard management,increasing supervision and information publicity and transparency toenhance people’s trust in banks and the government’s money managementpolicy.-VNA
Credit needs to grow by just 10 percent in 2014?
The State Bank of Vietnam’s Money Policy Department Director NguyenThi Hong said, “The 12 percent credit growth target for this year can beadjusted to match realities. The credit growth has reached 7.18 percentso far this year and is expected to increase to 10-11 percent by theyear’s end given that credit usually increases rapidly in the lastmonths of the year. The State Bank will flexibly adjust credit growthtargets for high-performing credit institutions and quickly resolve baddebts via the Vietnam Assets Management Company (VAMC).”
It is expected that the macro economy will improve in 2014 as a resultof economic recovery. However, many economic experts warned ofinflation again next year as a result of economic growth measures andthe budget overspending rate increase to 5.3 percent.
They also said that businesses will still face difficulties and thatto reach the economic growth rate of 5.8 percent next year, ministriesand sectors need to take comprehensive measures to boost credit flowsinto the economy.
Small and Medium EnterprisesAssociation Chairman Dr. Cao Si Kiem said that the State Bank of Vietnamhas put in place money policy tools under the market principle, whileensuring publicity and transparency, which has received good responsefrom the society, businesses and investors. However, systematicsolutions are also needed to resolve problems, particularly bad debts.
Economist Dr Vu Dinh Anh said, “The macro economywill not change drastically next year and it will be ok to continue themoney policy. The government should not loosen the money policy and setthe credit growth rate of 12 percent. It is reasonable to increasecredit by only 10 percent in 2014-2015 since both banks and businesseshave realised their difficulties.”
“The mostimportant thing for the Vietnamese credit system is not to grow but toimprove the quality of credit and resolve bad debts, particularly stopnew bad debts. In case that credit standards are loosened, the amount ofbad debts will increase within three to six months," he stressed.
Temporarily using profits to resolve bad debts
Many said that the money policy still need to be flexible and stableand the struggle with bad debts should be accelerated. NationalFinancial Monitoring Committee Deputy Chairman Truong Van Phuoc saidthat resolving bad debts meant that credit will be reduced and that thecredit growth rate could be lowered to 9 percent. “We have used profitsfor the next three years to resolve national bad debts,” he said.
HSBC Vietnam General Director Summit Dutta said that establishing abad debt management authority is a good solution in the currentsituation. Dr. Cao Si Kiem also said that resolving bad debts shouldstill be a major task for next year. Without this, businesses will beunlikely to recover and banks will be unlikely to become stable.
Business Development Research Institute Director Dr. Le Xuan Nghiasaid that if banks resolve their bad debts, the credit growth rate willincrease to 14-15 percent in the near future.
Healso suggested that the State Bank of Vietnam pay special attention toresolving bad debts, strengthening international-standard management,increasing supervision and information publicity and transparency toenhance people’s trust in banks and the government’s money managementpolicy.-VNA
