The State Bank of Vietnam (SBV) will control inflation under 4 percent and stabilise the macro economy to reach a GDP growth of 6.7 percent, as well as ensure a safe operation for the banking system, a high ranking official of the central bank said.
A consumer shops at a supermarket (Photo: VNA)
Speaking with the media in HCM City on January 16, SBV Deputy Governor Nguyen Thi Hong said that “many unexpected things could happen to the world’s economy, and surely affect the Vietnamese economy.”
The SBV has set a goal to gain a credit increase of 16 percent for growth of 16 – 18 percent in total payments, and will try to cut the medium- and long-term interest rates, as well as stabilise the foreign currency exchange rate.
SBV established the goals based on achievements reached in 2016, with inflation at 4.74 percent, lower than the target set by the National Assembly of 5 percent. Credit development was 18.4 percent and foreign currency exchange rate was stable, despite international events such as Brexit and the victory of US President-elect Donald Trump.
“For a long time, we have been able to control inflation lower than the National Assembly’s target. Low inflation has helped industries and ministries manage and control prices in the market,” Hong added.
She also said that pressure to increase the interest rate had appeared early last year but thanks to flexible solutions in managing credit and interest rates, the floor for interest rates dropped around 0.5 – 1.6 percent.
“We paid attention to production and other high-risk industries, so they were under tight control,” she said.
In 2016, credit growth for real estate was half of the rate of 2015.
“To stabilise foreign currency exchange rates, the SBV kept a strong policy to have high interest for Vietnamese dong and low interest for foreign currency. This has mostly eliminated speculation in foreign currency,” she added.
Last year, the SBV bought a reserve of foreign currency but still controlled inflation.
“SBV tightened control with credit institutions and commercial banks to ensure safety of operations and ability to pay. Bad debt remained under 3 percent, like the figure in 2015,” Hong said.
“SBV will work with relevant agencies to map out a special law to boost bank restructuring and settle bad debts in 2017,” the deputy Governor added.
Hong said the new law on supporting the banking sector in restructuring and resolving bad debts would mention all legal regulations related to the activity.
Obstacles in existing legal regulations would also be addressed under the new law to remove hindrances in resolving bad debts.
With a detailed and adequate legal framework, she expected it would be easier for the banking system to implement restructuring.
She also announced that the SBV had approved establishment of a Communication Department, which would help SBV provide exact information about economic management to the market and public.