16:04 | 13/05/2014 Economy
(VEN) - According to the State Bank of Vietnam, as of April 22, 2014, credit provided for the economy increased only 0.62 percent over late 2013 even though interest rates continued to fall and credit was concentrated on prioritized sectors according to the government’s policy.
Making transactions at the Vietnam International Bank (VIB)
To achieve credit growth of 12-14 percent in 2014, the State Bank of Vietnam has set credit growth targets for credit institutions while implementing the VND30 trillion bailout package, expanding the program connecting banks and businesses and the credit program for purchasing rice and paddy rice for storage during the 2013-2014 winter-spring crop and instructing commercial banks to apply loan policies for livestock breeding and fishery businesses.
On March 18, 2014, the State Bank lowered the maximum interest rates subject to Vietnamese dong and US dollar deposits and the maximum interest rate subject to short-term Vietnamese dong loans designed for prioritized sectors and asked credit institutions to reduce loan interest rates (including old loans) to less than 13 percent per year. As of the end of April, the average Vietnamese dong deposit interest rate fell 0.5-1.5 percent per year compared to late 2013 and the loan interest rates for prioritized sectors decreased one percent per year compared to late 2013.
The banks continued to lower interest rates subject to old loans. As of April 3, 2014, Vietnamese dong loans with an interest rate of more than 15 percent per year accounted for about 5.5 percent of the total Vietnamese dong-based outstanding loan balance, while the ratio was 65.8 percent before July 15, 2012. Vietnamese dong loans with an interest rate of more than 13 percent per year accounted for 16.62 percent of the total Vietnamese dong-based outstanding loan balance, while the ratio was 31 percent in June 2013.
As of April 22, 2014, credit provided for the economy increased only 0.62 percent over late 2013. Therefore, reaching the 2014 target will be a hard job and effective measures for tapping credit sources will be necessary.
State Bank of Vietnam’s Monetary Policy Department Director Nguyen Thi Hong said that credit grew in the first four months of this year and that credit growth had shown good signs. Hong also said that the monetary market and banking activities would experience many changes in the context of wider and deeper international integration, and that the State Bank will keep eye on capital flows that influence the credit growth to find proper solutions.
In the following months, the State Bank said that monetary policies would be managed on a flexible basis and pertaining to fiscal policies, aimed at taming inflation according to the set targets, promoting proper economic growth, ensuring the liquidity of credit institutions and the economy, managing open market operations and interest and exchange rates on a flexible basis and in accordance with macroeconomic and monetary developments especially inflation development, accelerating credit institution restructuring and solving the bad debt problem to assure the banking system’s safety.
Credit will be concentrated on prioritized sectors. The State Bank will instruct commercial banks to boost credit programs for housing projects and the program improving links between the banks, investors, contractors and suppliers, realize solutions to solve problems and promote production and trading activities./.