On July 6, 2025, in Directive No. 104 on enhancing the effectiveness of monetary and fiscal policy management, the prime minister directed the State Bank of Vietnam (SBV) to strive for a 2025 credit growth target of approximately 16% compared to 2024. The directive also sets a vision for 2026: to manage credit growth through market-based tools, moving away from the current administrative credit growth quota system. More specifically, the prime minister requested a review of the removal of administrative tools in managing credit growth, namely the allocation of credit growth quotas to individual credit institutions. This is not the first time the question of whether Vietnam should scrap the credit growth cap has surfaced. Since 2019, the issue has been raised almost every year — and even brought before the National Assembly. In other words, from before the Covid-19 pandemic through to the post-pandemic period, Vietnam has remained entangled in the ongoing question: “When will we remove credit growth quotas?” Why were credit growth caps introduced? The SBV introduced credit growth ceilings for commercial banks in 2011, following a period of overheated credit expansion that had pushed up interest rates and inflation, threatening macroeconomic stability. That period also saw […]