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|Credit growth should be kept at a reasonable level, around 16-18 per cent, this year. - VNS Photo|
The Vietnamese economy must grow 7.4 per cent in the second half of this year to fulfill 2017’s growth target of 6.7 per cent, and this will depend largely on credit growth and interest rates.
According to Nguyen Thac Hoat, Head of the Institute of Policy and Development’s Finance and Money Faculty, Viet Nam needs breakthroughs to meet the growth target and to create drivers for growth.
Besides long-term measures such as economic reforms, restructuring State-owned enterprises and developing the private economy, management agencies should focus on monetary policies, Hoat said.
Monetary policies were moving in the right direction but will take time to affect the economy, Hoat said, urging the improvement of management efficiency.
Hoat said that the pressure on exchange rates would be considerable till the year ends as the US Federal Reserve might hike rates. Fluctuations of exchange rates should be kept at 2-3 per cent to ensure stability for the monetary market, he added.
The State Bank of Viet Nam’s move to cut rates by 0.25 – 0.5 per cent last weekend was not really loosening monetary policies but aimed to help commercial banks reduce lending rates and boost credit growth, according to Hoat.
Can Van Luc, director of BIDV Training School at the Bank for Investment and Development of Viet Nam, said pursuing a high growth rate in the short term would pose risks to the macro-economy and the financial system, with the economy short of resources for sustainable growth.
“Slow economic reform and bad debt resolving significantly affect the goal of lowering lending rates and cleaning up the financial system. The banking system will continue under pressure for capital and credit packages to support the economy,” Luc said.
Luc said credit growth should be kept at a reasonable level (16-18 per cent) this year, adding that 18-20 per cent credit growth would be too much.
Close watch must be placed on credit growth and ensure capital goes into production and business, according to experts. In addition, restructuring credit institutions and resolving bad debt must be hastened.
Luc also proposed reviewing regulations on the capped ratio of short-term financing used for medium and long-term loans which would be cut from the current 50 per cent to 40 per cent from the beginning of next year, adding that a ratio of 45 per cent would be more reasonable to ensure liquidity.