By September 20, the total means of payment increased by 9.59 per cent compared to the end of 2016; capital mobilization of credit institutions increased by 10.08 per cent and credit growth of the economy reached 11.02 per cent. According to GSO, credit continues to grow, showing the positive development trend and capital absorption capacity of the economy.
Earlier on July 10, 2017, the State Bank of Vietnam reduced its lending interest rate by 0.25 per cent and implemented supporting measures to reduce interest rates under the government's guidelines.
Credit institutions actively implement the policies and instructions of the State Bank of Vietnam on reducing interest rates. Specifically, short-term interest rates for priority sectors were reduced by 0.5 per cent per annum, and the figure for production and business is 0.5-1 per cent; meanwhile, the medium and long-term interest rates for priority sectors decreased to eight per cent per year.
Also, the short-term interest rates are expected to reduce by 0.5 per cent by the end of 2017.
The State Bank of Vietnam has been assigned to continue reducing the interest rates by 0.5 per cent by the end of 2017 and increase the credit growth of 2017 to about 21 per cent to boost production and business.
However, some international financial institutions like HSBC Bank and Asian Development Bank (ADB) said that high level of credit growth is not enough to boost Vietnam’s economic growth and it even leads to major risks related to fiscal deficits, budgets, and credit quality.
According to Fitch Ratings, an international credit rating agency, increasing credit growth to achieve GDP targets could lead to a wave of default as it happened in the past.
In the meeting of the National Financial and Monetary Policy Advisory Council on September 29, 2017, members of the Council said that the State Bank of Vietnam needs to monitor the market, trying to avoid the changes, ensure the credit quality and the effectiveness of projects.
Besides, the ministries and departments should soon issue the documents to instruct the implementation of the Resolution No. 42/NQ-CP to accelerate the process of handling bad debts.