Moving forward: An assembly line at a Vinfast factory in Hai Phong. Central bank deputy governor Nam says the management on rates will stablise in time and that when conditions permit, rates can be cut further. — AP
HANOI: Prime Minister Pham Minh Chinh has sent a telegram to the governor of the State Bank of Vietnam, Finance Minister and chairmen of provincial and municipal People’s Committees seeking greater implementation of solutions to increase capital access and the removal obstacles facing production and business.
The move came after the credit growth rate was reported at a disappointingly low 6.29% as of Oct 11, compared to 11.12% in the same period last year and the target of 14% to 15% for the full year.
Chinh asked the State Bank of Vietnam to closely watch the market developments to have timely, flexible and efficient monetary policies with a priority placed on promoting growth, stabilising macro-economic situation, controlling inflation and ensuring major economic balances and safety for the credit system.
The credit growth must be managed reasonably and effectively to achieve the target, while the credit quality must be improved and the flow be directed into production, business and prioritised sectors which can help drive economic growth, including investment, consumption and exports.
In addition, control must be tightened on credit flow into risky sectors.
It was critical to simplify lending procedures and rates, and drastically implement the 120 trillion dong credit programme for property and home buyers of social housing projects and the 15 trillion dong package for the forestry and fishery sectors.
The focus would be on timely raising measures to remove problems in accessing capital and bond markets to ensure market stability and credit system safety.
The Prime Minister also asked the Finance Ministry to implement expansionary financial policy, focus reasonably and effectively to accelerate investments, especially private investment together with public investment to promote growth, stabilise macroeconomy and control inflation.
Chnh called on the Finance Ministry to study measures in tax and fee reductions and extensions for 2024 to provide support to enterprises to overcome the difficult times.
Tax collection must be strengthened in sectors such as eCommerce and the night economy, while the procedures for tax refunds must be sped up.
The Finance Ministry’s statistics showed that financial support packages were estimated to total around 196 trillion dong this year, bringing the total financial support to 700,000 trillion dong in the 2020 and 2023 period.
Finance Minister Ho Duc Phuoc said that support to the economy had been at unprecedented levels in recent years, accounting for around 8.3% of the country’s gross domestic product (GDP), much higher than other countries with the same economic scale.
As financial policy was just one among many solutions to deal with the economic difficulties, the core issue was how to increase the aggregated demand of the economy, Phuoc said.
“It is necessary to synchronously implement solutions, including monetary policy, investment policy, administrative and investment climate reforms and speed up public investment disbursements,” Phuoc said.
Removing difficulties for production and business played a vital role, especially in the real estate sector, Phuoc said, adding that Vietnam also needed to continue improving the investment climate to increase the attraction of foreign direct investment (FDI).
Export remained sluggish as markets were narrowing down, putting significant pressure on companies, he said, adding that measures were needed to expand export markets and pave the way for Vietnamese goods to extend international shares.
In 2024 and 2025, the financial policy must be implemented with flexibility, but strictly complying with the principle of budget balance and financial discipline, Phuoc said.
“The world is facing unusual changes and Vietnam needs special solutions to counter these,” he said.
Since the beginning of this year, the State Bank of Vietnam has slashed operating rates four times, bringing the refinancing rate to 4.5% and rediscount rate to 3% in order to create favourable conditions for commercial banks to reduce rates and increase lending.
Deputy governor of State Bank of Vietnam Nam Dao Minh Tu said that the management on rates would stablise in time, and added that when conditions permitted, rates could be cut further.
He also urged banks to continue lowering lending rates, especially for existing loans.
According to Tran Xuan Bach, a market analyst at Bao Viet Securities Company, as inflation was still under control, there was room to continue to cut rates in the last quarter of this year and there was no sign for reversing the trend of loosening monetary policy this year.
Economic expert Dinh Trong Thinh said that there was still the possibility of continuing to lower rates, but that room narrowed significantly.
The central bank might keep operating rates unchanged or reduce them slightly by 0.25 percentage points, he said.
Deposit rates might continue to decrease but the pace would be slow while lending rates would decrease faster, Thinh said.
Sharing the same viewpoint, deputy director of the Banking Academy, Pham Thi Hoang Anh, said that it was not necessary for the central bank to further cut rates till the end of the year.
Banks must reduce operation costs reasonably to create room for further cuts, she said.
Since the beginning of October, more than 22 commercial banks cut deposit rates.
Vietcombank cut rates last Friday to 2.8% for deposits of one-month terms, 4.1% for six months and the highest rate of 5.1% for deposits with terms of one year or more.
Vietcombank offered the lowest deposit rates among the Big Four banks, including Agribank, BIDV and Vietinbank. The highest deposit rate among the Big Four was 5.3%.
A survey by the State Bank of Vietnam found that credit growth was expected at 4.6% in the last quarter of this year, which meant that the credit growth would be at 12.3% for the full year. — Viet Nam News/ANN
