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Thursday, October 6, 2022

Central bank seen increasing credit growth target

By Van Phong

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HCMC – The central bank governor has said the remaining room of the 14% credit growth target for this year would be adjusted up to allow banks to lend to clients.

The disbursement of the Government’s preferential credit package with an interest rate discount of two percentage points has remained too slow, estimated at a mere VND13.5 billion by late August.

Nguyen Thi Hong, governor of the State Bank of Vietnam (SBV), said the central bank branches would hold a conference connecting banks and corporate clients. She was speaking at a meeting on removing hurdles in the rollout of the relief package under Government Decree 31/2022 held on August 26.

She also proposed the relevant ministries join hands with the central bank to come up with a solution.

Hong announced at a conference in late July that the authorities would keep the year’s credit growth at 14% to avoid an interest rate hike race and stabilize the exchange rate and foreign exchange market.

SBV’s statistics showed credit growth in the year to mid-August had reached 9.6%, 20 basis points higher than in end-June. 

This is a clear indication that credit grew strongly in the first half of the year and almost stalled in the following months as most banks had used up their credit growth quotas.

Dr. Can Van Luc, member of the National Financial and Monetary Policy Advisory Council, said the central bank needs a more flexible approach to credit growth.

“It will be too late if SBV waits until the fourth quarter when credit growth and inflation cool down,” Luc said during a forum on August 24. 

Credit loosening is essential to carry out the interest subsidy package, he said.

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