Will 'pump' nearly 700 trillion more into the economy?

Vietnam's banking system is facing the possibility of major adjustments in lending levels this year, according to the Prime Minister's "suggestion".

Specifically, at the Government Standing Committee meeting last weekend, Prime Minister Nguyen Xuan Phuc asked the Governor of the State Bank to calculate the possibility of raising the credit growth target for the whole year to 21-22%.

2017 may be the year marking the return of credit growth to high levels, after the period from 2011 - 2016.

Previously, the Prime Minister also directed that this year's target should reach about 20%, instead of the 18% that the State Bank had estimated and balanced from the beginning of the year.

Promoting and increasing credit growth is included in the calculation of measures that the Government focuses on promoting to achieve this year's economic growth target of 6.7%.

With the above suggestion, 2017 may be the year marking the return of credit growth to high levels, after the period from 2011 - 2016.

Specifically, from 2001 to 2010, credit growth in Vietnam continuously recorded a rate of over 20%, with 19.20% in 2005 alone; including some breakthrough years such as 2004 with an increase of 41.5%, 2007 with an increase of 53.89%, and 2009 with a stimulus year of 37.53%.

After that boom period, from 2011 credit growth suddenly dropped to only 10.9% and has remained below 20% each year until now (except in 2012 it was below 10%).

Returning to the Prime Minister's suggestion above, if credit growth reaches 22% this year, it means that the amount of capital "pumped" in, increased compared to the original estimate, is quite large.

Based on the total outstanding credit balance for the economy at about 5.5 million billion VND at the end of 2016, corresponding to the 22% growth rate in the above assumption, there could be an additional increase of about 1.21 million billion VND this year.

According to data from the National Financial Supervisory Commission, credit increased by about 9.3% in the first 7 months of this year. If the above growth target of 22% is followed, there will be about 698,500 billion VND in additional increase in the last 5 months of the year.

Compared to the State Bank's initial plan with credit growth this year at about 18%, the amount of additional loans based on the assumption of increasing to 22% mentioned above is about 220 trillion VND.

According to Minh Duc/vneconomy