Prime Minister requests flexible and effective credit policy management

On the morning of January 8, the State Bank of Vietnam held a conference to deploy the banking sector's tasks in 2024. Prime Minister Pham Minh Chinh attended and chaired the conference.

Also attending the conference were Deputy Prime Minister Le Minh Khai, along with leaders of central ministries and branches. On the banking side, there were Governor of the State Bank Nguyen Thi Hong and Deputy Governors.

The conference was held in person and online with State Bank branches in 63 provinces and centrally-run cities. Comrade Nguyen Thi Thu Thu - Director of the State Bank of Nghe An branch chaired at the Nghe An bridge.

Flexible and effective credit policy management

Speaking at the opening of the conference, Comrade Nguyen Thi Hong - Governor of the State Bank said: 2023 is a pivotal year of important significance in implementing the Resolution of the 13th National Party Congress and the 5-year socio-economic development plan 2021-2025.

However, the world economy is growing slowly, inflation is high, global trade is declining, basic commodity prices are fluctuating strongly, geopolitical conflicts, and food security policies are tightening. Central banks of countries continue to raise interest rates to control inflation. The USD is fluctuating strongly, and many countries' currencies are losing value.

Domestically, the economy is negatively impacted by international factors. Growth drivers such as exports, investment, and consumption are all facing challenges due to low global demand, difficulties in businesses and employment, and declining orders and markets.

The financial market has not developed commensurate with the needs of the economy. Capital needs for economic recovery are still mainly concentrated through bank credit channels, so there are potential systemic risks.

Following closely the developments in the macro-economy and currency, and the directions of the Government and the Prime Minister, the State Bank has proactively and promptly adjusted policies; issued and synchronously and optimally implemented tools and solutions for managing monetary policies and banking operations, contributing to stabilizing the macro-economy, controlling inflation, supporting economic growth recovery and ensuring the safe development of the credit institution system.

In 2023, the State Bank continuously adjusted the operating interest rates down 4 times with a total reduction of 0.5-2%/year in the context of world interest rates continuing to increase and anchor at high levels, thereby continuing to orientate towards reducing the market lending interest rate level, increasing access to capital for businesses and people.

Monetary policy management has contributed to stabilizing the macro economy, controlling average inflation in 2023 to 3.25%, lower than the target of 4.5% set by the National Assembly and the Government.

Non-cash payment indicators have positive growth; in 2023, the number of transactions will increase from 50.3-99.1%, the value will increase from 5.4-10.8% depending on the payment method, and payment systems will operate stably, smoothly and safely.

In 2023, Nghe An Banking sector will lead in terms of operating results in the North Central region with results as of October 31, 2023, mobilized capital reaching VND 221,353 billion, an increase of VND 21,562 billion compared to the beginning of the year, equal to 10.8%; higher than the national average (the whole country is 7.69%); higher than the same period in 2022 (7.6%). Total outstanding loans reached VND 277,670 billion, an increase of VND 17,146 billion compared to the beginning of the year, equal to 6.6%, almost equal to the national average of 6.81%.

However, the management of monetary policy and credit activities of credit institutions face many difficulties and challenges; some credit institutions still have many potential operational risks. The increasing development of technology is posing many risks and challenges to the work of ensuring security and safety of banking payments...

At the conference, delegates focused on clarifying a number of issues on credit growth to meet the credit capital needs of the economy, contributing to controlling inflation, supporting economic growth; digital transformation in the banking industry...

Credit growth target in 2024 is about 15%

In 2024, the world economy is forecast to face many difficulties and uncertainties. The domestic economy continues to face challenges as global demand has not yet recovered strongly. However, with the delay in economic support policy solutions that have been continuously implemented since the beginning of 2023, along with the Government's drastic direction on solutions to remove difficulties in the real estate market and corporate bonds, it is expected that economic growth in 2024-2025 may recover compared to 2023.

Some international organizations forecast Vietnam's GDP growth to be 5.5-6.5% in 2024 and 6-7% in 2025. In 2024, the credit growth target is about 15%.

Speaking at the conference, Prime Minister Nguyen Minh Chinh acknowledged and highly appreciated the achievements of the banking sector, contributing to stabilizing the macro-economy, controlling inflation, and supporting economic growth recovery.

The Prime Minister said that, in the face of the general difficulties and challenges of the economy, the sector has achieved many positive results, which is very good, so it is necessary to clarify the causes and experiences; from there, draw lessons in directing and operating monetary policy, stabilizing the macro economy to be steadfast and persistent in operating economic policy.

Banking is the lifeblood of the economy. In the coming time, the head of the Government requested the sector to continue to closely monitor developments and the world and domestic economic situation to proactively, flexibly and synchronously manage monetary policy tools; closely and harmoniously coordinate with fiscal policy and other macroeconomic policies to support economic growth associated with inflation control, contributing to stabilizing the macro economy, the money and foreign exchange markets and the banking system.

The industry needs to continue directing credit to production and business sectors, priority sectors and growth drivers (investment, consumption, export) according to the Government's policy; ensure safe and effective credit activities; continue to strictly control credit in potentially risky sectors.

At the same time, continue to promote the implementation of assigned tasks of the Banking sector in National Target Programs, credit programs and policies; Create favorable conditions for businesses and people to access bank credit capital, remove and promote the expansion of consumer credit in parallel with safety and health, contributing to limiting black credit.

Banking activities have many risks, so it is necessary to actively innovate, enhance the effectiveness and efficiency of inspection, examination and supervision. Inspection has a focus, key points, areas with potential risks to prevent, detect and strictly handle risks, problems and violations of credit institutions, contributing to ensuring security and discipline in the monetary and banking markets. This should be considered a key task of the banking industry in 2024.

Prime Minister Pham Minh Chinh

The Prime Minister requested the banking sector to continue to resolutely and effectively implement the Project on restructuring the system of credit institutions associated with handling bad debts in the 2021-2025 period; promote digital transformation in banking activities and non-cash payment activities, meeting the requirements for new business models and products and services on the basis of information technology, digital banking and digital payment.

Strengthening security and safety in payment activities and digital transformation. Continuing to coordinate with National Assembly agencies to complete the draft Law on Credit Institutions (amended) to submit to the National Assembly at the nearest session. Continuing to synchronously deploy solutions on foreign exchange management and the gold market, contributing to stabilizing the foreign exchange market, supporting monetary policy management, stabilizing the macro economy...