Continue to drastically reduce interest rates

Prime Minister's Speech at the Conference.jpg — Prime Minister Pham Minh Chinh delivered a speech at the conference.

Contribute to controlling inflation

Deputy Governor of the State Bank of Vietnam Dao Minh Tu said that in the first 6 months of the year, the State Bank of Vietnam has operated monetary policy firmly, flexibly, proactively, promptly and effectively, contributing to controlling inflation, stabilizing the macro-economy and supporting and prioritizing growth promotion.

The State Bank has reduced operating interest rates four times, with a reduction of 0.5-2%/year. By the end of June, the average deposit and lending interest rates of new transactions in VND of commercial banks decreased by about 1%/year compared to the end of 2022.

Commercial banks also adjusted and implemented preferential credit packages to reduce lending interest rates by about 0.5-3%/year depending on the customer for new loans.

The State Bank adjusted up the 2023 credit growth target for credit institutions to a system-wide level of about 14%.

Regarding the program to support debt restructuring and maintaining debt groups, by the end of June, over 18,800 customers had their debt restructuring and maintained their debt groups; the total outstanding debt (principal and interest) restructured to maintain the same group was nearly VND 62,500 billion.

Also according to data from the State Bank, by the end of June, the economy's outstanding credit balance reached over VND 12.49 million billion, an increase of 4.73% compared to the end of 2022. In particular, capital continues to be focused on production and business sectors, priority sectors.

In addition to commercial credit, the State Bank continues to facilitate the Vietnam Bank for Social Policies to promote the implementation of preferential credit programs for the poor, other policy beneficiaries and 3 National Target Programs. As a result, the total outstanding policy credit balance reached VND 304,431 billion, an increase of 7.4% compared to 2022.

Also according to the State Bank, non-cash payments increased by 52.35% in quantity.

Fiscal policy plays an important role

At the conference, Chairman of the Board of Members of the Vietnam Bank for Agriculture and Rural Development (Agribank) Pham Duc An said that in the current conditions, fiscal policy will play a very important role, especially in clearing public investment disbursement, thereby contributing to increasing resources for the economy and raising domestic demand.

In addition, the Government needs to create a mechanism to enhance the autonomy and self-responsibility of state-owned enterprises and state-owned commercial banks, thereby prioritizing target management instead of behavior management, so that state-owned commercial banks can be proactive, flexible, and create new products and services to meet competitive requirements.

Regarding monetary policy management in the coming time, the State Bank's leaders affirmed that the State Bank will continue to closely follow developments in the domestic and international macroeconomics, financial and monetary markets; and coordinate harmoniously, reasonably and closely with fiscal policy and other macroeconomic policies.

In particular, interest rates must be managed in line with macro-economic balance and inflation; credit institutions must be directed to cut costs to reduce lending interest rates, and unnecessary fees must be cut to support businesses and people in recovering and developing production and business.

At the same time, manage the growth of credit volume and structure reasonably, meeting the credit capital demand of the economy to contribute to controlling inflation and supporting economic growth. Continue to implement the credit package of 120,000 billion VND from capital sources of commercial banks, focusing on implementing the program to support 2% interest rate...

Focus on developing the corporate bond market

Speaking at the conference, Prime Minister Pham Minh Chinh pointed out the limitations, shortcomings and causes that need to be overcome in the coming time, stating that the interest rate level, especially lending interest rates, is still high compared to the economy's tolerance, higher than the desire for support and sharing of businesses and people to overcome the current difficult situation.

Prime Minister Pham Minh Chinh also said that Banking is the lifeblood of the economy, whether the blood vessels circulate well or not depends on the efficiency of the banking sector. Credit institutions must always accompany and share with the people and businesses.

Regarding the main tasks and solutions for the last 6 months of the year, Prime Minister Pham Minh Chinh emphasized that priority should be given to resolving difficulties, prioritizing consumption, investment and export. Implementing solutions to proactively and flexibly manage monetary policy, loosening it appropriately, promptly and effectively, promoting growth associated with macroeconomic stability and controlling inflation.

Regarding credit activities, the Prime Minister requested the State Bank to manage credit growth with a reasonable structure, meeting the credit capital demand of the economy; directing credit capital to production and business, priority sectors and growth drivers; continuing to implement synchronous and drastic solutions to reduce interest rates, especially reducing lending interest rates.

Determine credit growth limits appropriate to the practical situation. Direct the review of lending conditions and criteria to make appropriate and more favorable adjustments, ensuring increased access to credit for people and businesses, especially small and medium enterprises. Accelerate the implementation of the VND40 trillion interest rate support credit package and VND120 trillion social housing loans.

For credit institutions, the Prime Minister requested to implement solutions to reduce costs and fees to reduce lending interest rates; review and adjust lending conditions and criteria, reduce, simplify, publicize and make transparent lending procedures to increase access to credit for businesses and people.

Continue to proactively and flexibly manage exchange rates in accordance with domestic and international situations, macroeconomic and monetary balances and monetary policy goals; intervene flexibly to stabilize the foreign exchange market.

Regarding the development of the corporate bond market, the Prime Minister stated that bond issuance is an important capital mobilization channel for enterprises, helping to reduce dependence on bank credit capital. The scale of the corporate bond market is still modest with outstanding debt of about 15% of GDP. To develop this market, the Prime Minister requested to control the "massification" in the secondary market, clearly stipulate that organizations and individuals who are qualified and have a practice license are allowed to distribute privately issued corporate bonds; create conditions for well-performing enterprises to mobilize capital through bond issuance to support economic recovery.

According to the Prime Minister, credit rating is an urgent requirement that must be implemented soon to help restore confidence in the market; strive to have at least 5 credit rating organizations by 2030; the bond market must integrate internationally, learning from foreign experiences...

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