Vietnam’s government is racing to help businesses access loans as slowing exports continue to be a drag on the trade-reliant economy, putting at risk the nation’s growth target this year.
Vietnam’s 2023 credit growth through Aug. 9 was at 4.3%, far below the government’s full-year goal of 14%-15%, according to a government website post.
The government urged the central bank to immediately put in place “effective solutions” to increase accessibility of bank loans for businesses, the statement posted on the cabinet’s website said. The government directed the regulator to continue ordering commercial banks to trim expenses to cut lending costs.
Vietnam may miss its 6.5% economic growth target this year as a downturn in global demand for goods has hit the nation’s factories that make everything from sneakers to smartphones.
Gross domestic product in the three months ending June rose 4.14% from a year earlier. Earlier this month, Prime Minister Pham Minh Chinh said the government aims to push economic growth to “about 9%” in the second half of the year in order to meet the full-year target.
The premier has continually directed the State Bank, finance ministry and other agencies to help make loans more affordable to businesses.
He and other government officials have also called for a reduction of key rates to help the economy amid slowing inflation. While the State Bank of Vietnam slashed rates four times this year, monetary authorities have been hesitant to further ease policy, citing concerns about bad debt that could in turn threaten the nation’s financial stability.
A year earlier, Vietnam’s credit growth for the Jan.-July period was at 9.55%, according to data on the central bank’s website. For Jan.-Aug. 2022, loan growth was 9.98%.
The government also asked the finance ministry to mull further tax-break proposals, quicken value added tax refunds to businesses and work on measures to ease the corporate bond crisis, according to the statement.
Vietnamese companies, particularly property developers, have struggled accessing loans, selling bonds and raising funds, leading to suspended projects.
The crisis started last year after officials cracked down on corporate bond issuances following allegations of illegal activities, triggering a sudden freeze of new issuances.
Source: The Star
