With the facts that the foreign reserve hits the record high of USD 46 billion, the interest rates are basically stable and tending to decline, the exchange rate is stable and managed with flexibility in line with market developments, it can be said that the banking sector remains healthy. Many international financial/monetary organizations and foreign credit institutions have praised Vietnam’s management of monetary policy. For instance, Moody’s Investor Service (Moody’s) recently raised the rating from ‘stable’ to ‘positive’ for credit institutions in Vietnam, or Bloomberg also rated the Vietnamese dong (VND) to be one of the most stable currencies in Asia.
In an interview with a reporter of the SBV Portal, Deputy Governor Dao Minh Tu of the State Bank of Vietnam (SBV) said: “Recently, the SBV had a meeting with international financial/monetary organizations and foreign credit institutions. All of them spoke highly of the management of macro-economy and monetary policy, especially the stabilization of the money market in Vietnam. They also gave positive comments on Vietnam’s interest rate policy, particularly when the interest rates are tending to decline, facilitating enterprises’ production and business. At the same time, compliments were also given on Vietnam’s management of the exchange rate and forex activities.”
“In the context of moderate inflationary pressures, monetary policy and credit continue to be balanced between macro stability and growth support”, it is the assessment of the World Bank’s latest Report “An Update on Vietnam’s Recent Economic Developments” (December, 2017). According to the WB, the Consumer Price Index (CPI) in Vietnam increases by 3% (as compared to that of the same time last year) on the basis of the core inflation stabilized at 1.3% in October, 2017. With the moderate inflationary pressures, the SBV decided to cut down the discount rate and the refinancing rate by 25 basis points to 4.25% and 6.25% respectively in July.
The WB’s assessment also reflects the views of many economists on positive growth of Vietnam’s economy with great contributions of the SBV in relation to the management of monetary policy.
Mr. Eric Sigwick, Country Director of the Asian Development Bank to Vietnam speaks highly of the stabilization of Vietnam’s banking sector in 2017
Exchanging views with an SBV Portal reporter, Mr. Eric Sigwick, Country Director of the Asian Development Bank (ADB) to Vietnam, said: “2017 is the successful year for Vietnam’s economy in general and for the SBV in particular. Specifically, the GDP growth has reached 6.7% for the whole year, a target which was not achieved for several years in the past. The inflation is controlled at below 4%. Credit growth has been reasonable at 18% with a focus on production and business. The exchange rate is stable and managed with flexibility in line with market developments. Liquidity in the banking sector remains strong. Foreign reserve in 2017 hits the record high of USD 46 billion.”
On October 31, 2017, Moody's Investors Service changed its outlook for Vietnam's banking system from “stable” to “positive”. This is the second time Moody’s has raised the rating of Vietnam’s banking sector for the last 6 years. It is a positive signal reflecting the effectiveness of the Government's consistent measures of stabilizing macro-economy, curbing inflation, boosting economic growth together with the management of monetary policy in a flexible manner. Particularly, the implementation of the Scheme on restructuring the credit institution system in collaboration with resolving non-performing loans (NPLs) has brought about encouraging results in ensuring a prudent banking sector, which has been recognized by the international organizations.
Besides, in the most recent Bloomberg’s assessment on the stability of a number of currencies in Asia, the Vietnamese dong (VND) was rated as one of the most stable Asian currencies this year. Therefore, it can be said that the SBV’s management of monetary policy over the past time has been acknowledged and highly praised by the international financial/monetary organizations. Despite of the impacts from the world economy, the SBV’s policies still reflect the transparency, flexibility and in conformity with the market.
The WB and the ADB also spoke highly of Resolution 42 and the revised Law on Credit Institutions, which are important legal documents to create a comprehensive mechanism for enhanced resolution of NPLs and to unblock the capital flow at Vietnam Asset Management Company (VAMC).
Le Hang