At the Conference on Reviewing the Performance in 2023 and Dissemination of the Tasks in 2024 between the Government and the local authorities in the morning of January 5, 2024, Governor Nguyen Thi Hong of the State Bank of Vietnam (SBV) delivered a speech on the monetary management and the banking performance in 2023.
According to Governor Nguyen Thi Hong, 2023 had continued to be a particularly difficult year for the macro-economic management of the Government, with a lot of complicated developments around the world. And inside the country, the mass deposit withdrawals at the SCB in late 2022 heavily affected the liquidity and the market psychology in 2023.
In that context, the SBV has consistently managed the monetary policy in a proactive and flexible manner, contributing to controlling the average inflation at 3.25%, ensuring safe and sound banking operations and the stability of the forex market.
The Vietnamese Dong has depreciated by about 2.9%, showing that it is one of the currencies with high stability, and the State foreign exchange reserves have been improved as compared to those at the end of last year. These are the plus points for the improvement of Vietnam's credit rating in 2023.
The SBV had cut down the key interest rates 4 times. At the same time, the SBV had requested the credit institutions to reduce their operational costs and apply consistent measures to reduce their lending interest rates. Currently, the mobilizing interest rates and the interest rates applied to new loans have decreased by about 2.0% p.a. compared to those of the end of 2022. It is said that the interest rates have decreased to the same levels as those of pre-COVID time.
The SBV had also issued a policy on rescheduling debt payment and maintaining debt groups, and had conducted several credit programs, such as the credit package worth VND 120,000 billion for the real estate sector; the credit package worth VND 15,000 billion for the fisheries sector; had assigned the full credit growth targets to the credit institutions at mid-2023, and coordinated with a lot of cities and provinces to organize hundreds of bank-enterprise connection conferences.
As of the end of 2023, the credit growth rate had reached about 13.7%, relatively lower than the level of 14.18% in 2022.
The SBV had also implemented the Scheme of Restructuring the system of credit institutions in association with NPL resolution for the 2021-2025 period", which is currently in the final stage of completion before the legal transfer.
Participants at the Conference
Moreover, the SBV is also one of the Ministries and agencies pioneering in the digital transformation to reduce the costs and increase the utilities for businesses and the people. Currently, most banking services and operations have been performed in the digital environment. In addition, the SBV has been coordinating with the Ministry of Public Security to limit 'black credit'.
At the Conference, Governor Nguyen Thi Hong made two recommendations, specifically as follows:
Firstly, in the context that Vietnam's total credit outstanding over the GDP currently stands at high level as warned by a number of international organizations, it is necessary to focus on implementing synchronous solutions to remove the difficulties for the real estate market and the corporate bond market. In particular, it is necessary to resolve the legal obstacles to allow projects to resume their operations and limit arising bad debts, creating conditions for the development of the corporate bond market, reducing the dependence on the banks’ capital, especially for medium and long-term capital.
Secondly, the SBV recognizes that currently, SMEs in Vietnam account for 95% of the total number of businesses, but they are still facing a lot of difficulties. Therefore, the Government's measures need to focus on this group. Besides, it is necessary to provide guidance for businesses to meet the strict regulations on the sustainable and green standards, because if they fail to meet these standards, Vietnam's export activities will face many difficulties.
Le Hang