Prime Minister Pham Minh Chinh has signed Dispatch No. 18/CD-TTg on March 5, 2024 on the steering of credit growth in 2024.
The Prime Minister has requested immediate implementation of operational measures to continue reducing lending interest rates, coupled with enhancing access to credit to support the development of production and business activities of people and enterprises.
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The Dispatch states that 2024 is a year of accelerated growth, which is of great significance in successfully implementing the 5-year Socio-economic Development Plan 2021 – 2025. The global and regional situation is forecasted to continue to have complex and unpredictable developments, while the effects of the COVID-19 pandemic continue to linger. Domestically, the economy is facing both favorable conditions and challenges, with more difficulties and challenges prevailing. Inflationary pressure remains high, and there are still difficulties in production and business activities in certain sectors and areas. Although lending interest rates have decreased, they have not correspondingly declined with the deposit interest rates. Credit growth in the first two months of 2024 has decreased compared to the end of 2023.
To continue improving the effectiveness of monetary policy tools and resolutely implementing operational measures on interest rates and credit management to support the production and business activities of people and enterprises, promote economic growth, stabilize macroeconomic conditions, control inflation, and ensure the overall balance of the economy, the Prime Minister has required:
The State Bank of Vietnam to take the lead and coordinate with relevant agencies
Urgently review comprehensively the results of credit issuance by the credit system to the economy, each sector, and each field; the results of credit issuance by each credit institution, commercial bank up to the present time in order to, within its authority and pursuant to the provisions of the law, implement effective, feasible, and timely measures for credit and interest rate growth in 2024, ensuring the provision of sufficient credit capital to serve the economy and the safety of the credit system; absolutely not allow obstacles, delays, untimeliness. In cases of content beyond its authority, timely report and propose competent level according to regulations; be responsible to the Government and the Prime Minister for the implementation of monetary policy and credit growth.
Monitor closely the global and domestic economic developments to proactively, flexibly, timely, and effectively implement monetary policy; flexibly, harmoniously, reasonably manage interest rates and exchange rates in accordance with the market situation, macroeconomic developments, and the objectives of monetary policy in accordance with the key tasks and solutions stipulated in Resolution No. 01/NQ-CP dated January 5, 2024 of the Government, prioritizing the promotion of economic growth, addressing difficulties in production and business activities, ensuring effective credit growth, meeting foreign currency needs for production and business, and being in line with macroeconomic stability, inflation control, and ensuring the major balances of the economy, the operation safety of banks and the credit system, and the realization of the credit growth targets set forth in 2024.
Immediately implement operational measures to continue reducing lending interest rates, coupled with enhancing access to credit capital to support the development of production and business activities of people and enterprises, ensuring the supply of sufficient credit capital and healthy foreign currency, with a focus on priorities, key areas, serving, and meeting the capital needs of the economy and the safety of the credit system.
Strengthen and enhance inspections, checks, control, and close supervision of credit provision by credit institutions, ensuring the credit flow, including foreign currency credit, concentrates on priority areas, important areas, and growth drivers of the economy (consumption, exports, investment), serving the development needs of production and business of enterprises, people who have conditions to expand production and business safely, healthily, sustainably but lack capital. Prohibit credit provision that does not comply with legal regulations, does not comply with targets, and credit provision with preferential interest rates to executives, management boards, and related parties of credit institutions, ecosystem enterprises, and shadow enterprises, while people and enterprises with legitimate and legal needs encounter difficulties in accessing credit and foreign currency. At the same time, implement tools to control inflation and minimize and limit the increase of bad debts for credit institutions.
The State Bank of Vietnam shall direct and request credit institutions:
Closely follow the Government’s and the State Bank of Vietnam’s directions, continue to reduce lending interest rates (reduce costs, simplify administrative procedures, enhance the application of information technology, digitization, etc.); publicly announce average lending interest rates for people and enterprises to conveniently access credit and choose banks for loans. Strengthen the effective deployment of preferential credit packages appropriate to the specific conditions of each credit institution for important areas and growth drivers of the economy following the Government’s guidelines; promote the leading and exemplary role of efficient business credit institutions and state credit institutions; strengthen social responsibilities, business ethics of credit institutions in sharing and supporting people and enterprises.
Direct credit capital sources to production and business sectors, priority areas, and traditional growth drivers such as consumption, investment, exports, digital transformation, climate change response, green transformation, circular economy, science, technology, and innovation… of the economy following the Government’s guidelines; continue to strictly control credit flows to potential high-risk areas, ensure safe and effective credit operations.
Strengthen communication, guidance for customers, beneficiaries in accessing policies. Pay attention to providing clear, complete, transparent, accurate information about policies, products, credit services, exchange rates of credit institutions to the public.
Prime Minister assigned Deputy Prime Minister Le Minh Khai to monitor, direct, inspect, and urge handling according to his authority. The Government Office will monitor, urge according to its assigned functions, tasks, and authority; report to the Prime Minister on matters beyond its authority.
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At the regular Government press conference on March 2, when responding to a reporter’s question about credit growth, Mr. Pham Thanh Ha – Deputy Governor of the State Bank of Vietnam – explained the reasons for the recent low credit growth. First is the seasonal nature. The early months of the year usually have low growth due to reduced loan demand and enterprises limiting borrowing at the beginning of the year. On the other hand, this year there is an additional objective factor in that the global economic situation has not yet recovered strongly. The main export markets of Vietnam have not shown a strong recovery, affecting export output. Furthermore, credit demand has decreased due to domestic economic difficulties. To promote credit, Deputy Governor Ha said that at the beginning of February, the agency had requested banks to simplify loan procedures to enhance customer access to capital. Regarding enterprises, Ha believes that they also need to actively have more feasible and transparent projects that have financial capacity, for the banks to assess and provide capital. |
