Vietnam Prime Minister Phạm Minh Chính chairs the meeting on monetary policies. — VNA/VNS
HANOI: Prime Minister Pham Minh Chinh has asked for proactive, flexible, timely and effective monetary policies to be continued to promote the country’s socio-economic development while ensuring the safety of Vietnam’s financial and banking systems.
Pham was speaking while working with the State Bank of Vietnam (SBV), the Finance Ministry, the Planning and Investment Ministry and relevant agencies on the management of monetary policies on Monday.
With difficulties and challenges outnumbering advantages and opportunities, Pham said that the monetary policies must be reviewed for adjustments to improve efficiency, with a special focus on credit growth.
To accelerate economic growth in the remaining months of this year, the money supply must be increased, he added.
However, the increase in money supply must ensure the inflow into sectors considered to be traditional and new growth drivers and control bad debts that are on the rise.
Citing statistics showing that the deposits of residents reached around 16 quadrillion dong, Pham asked for solutions to direct the capital to production and business.
The PM emphasised that the monetary policies have worked effectively, but in the long term, it was critical to raise methodical and fundamental solutions to prevent dollarisation.
“Policies must encourage people to invest their money in production and business to create jobs, thereby generating incomes and improving living standards, rather than hoarding gold or US dollars,” he said.
The SBV said that it has closely and proactively watched domestic and global economic developments to deploy solutions to create favourable conditions for enterprises and the people to access banking credit.
Efforts have been made to increase the capital absorption capacity, promote growth associated with ensuring macroeconomic stability, control inflation and ensure the safety of the credit institution system, SBV governor Nguyen Thi Hong said.
As of July 31, the central parity rate was at 24,255 dong for a US dollar, increasing by 1.63% against the end of 2023. This is a low average level and more stable than other countries in the region and in the world.
Interest rates for new and existing loans continue to decrease.
By the end of June, the average lending rate was at 8.3% per year, down 0.96 percentage points compared to the end of 2023. Deposit rates averaged 3.59%, down 1.08%.
Statistics from the SBV showed that credit growth reached 6% as of the end of the second quarter of 2024.
The central bank has joined relevant ministries, agencies and localities in implementing credit stimulus packages such as the 120 trillion dong credit line for social housing and credit programmes for the forestry and fishery sectors worth 34.4 trillion dong.
However, the central bank said it is not easy to further lower lending rates.
The challenges also come from difficulties in stabilising exchange rates, rising inflationary pressures, low credit growth, and bottlenecks in speeding up the disbursement of the 120 trillion dong social housing credit package.
Pham asked for solutions to prevent lending rates from rising in the remaining months of this year, when demand for capital is expected to be higher in the first half.
“Monetary policies must be synchronised, coordinated and supportive of each other to create policy messages,” he said.
Pham also called for the implementation of digital transformation to enhance state management efficiency, as well as tax and fee extensions and reduction and exemption policies.
The focus must be on speeding up public investment disbursement and credit growth and promoting exports to reach around US$750bil to US$800bil in 2024.
In addition, efforts must be made to utilise free trade agreements (FTAs), promote negotiations of new FTAs, accelerate domestic consumption, diversify markets and supply chains, improve the investment environment and attract new investments, he said.
Pham urged commercial banks to further reduce operation costs to lower rates for prioritised sectors, sectors considered to be growth drivers and major infrastructure development projects on the basis of harmonising benefits and sharing risks. — Viet Nam News/ANN
