Abundant liquidity and room for credit growth

On the afternoon of September 28, Deputy Prime Minister Le Minh Khai, Chairman of the National Financial and Monetary Policy Advisory Council, chaired the Council’s plenary meeting. Attending the meeting were Governor of the State Bank of Vietnam Nguyen Thi Hong, Vice Chairman of the Council, and members of the Council.

At the meeting, the State Bank of Vietnam presented a report on macroeconomic developments and banking activities in the first quarter of 2024; proposed solutions to remove difficulties for production and business activities, promote growth and ensure major balances of the economy; the gold market situation and solutions to manage the gold market in the coming time.

Presenting the report, Deputy Governor of the State Bank of Vietnam Pham Thanh Ha said that, closely following the direction of the Government and the Prime Minister, the State Bank has synchronously deployed solutions to manage monetary policy and banking activities, regulate liquidity, balance interest rates and exchange rates, support economic recovery but not be subjective with inflation risks.

The average interest rates for deposits and loans for new transactions are 3.1%/year and 6.5%/year, respectively, down about 0.4%/year and 0.6%/year compared to the end of 2023. Exchange rates fluctuate in line with the trend of international currencies against the USD.

Credit growth at the beginning of the year was low mainly due to the seasonal factors of the Lunar New Year and low capital absorption capacity, but it recovered in March 2024. Abundant liquidity and room for credit growth remain for credit institutions to provide credit capital to the economy in the coming time.

The State Bank continues to direct credit institutions to restructure debt repayment terms, maintain debt groups according to Circular 02 and is reviewing to amend, supplement and extend the Circular; continue to implement credit programs and policies for priority sectors and growth drivers such as the VND 120,000 billion credit program, forestry and fishery loan program, etc.

The gold bullion market is fundamentally reorganized, orderly and disciplined.

The gold bar market was fundamentally reorganized, orderly, and disciplined; the gold bar trading network was gradually narrowed; capital mobilization and lending activities in gold were terminated.

During many times when gold prices fluctuated complicatedly, market activities remained relatively stable compared to the previous period, without putting pressure on the official foreign exchange market as before; people's habits and awareness of gold bars changed; a part of the people's gold resources were transformed for economic development.

The difficulties and problems raised by Deputy Governor Pham Thanh Ha are that the domestic and foreign economic outlook is still uncertain and unpredictable, world commodity prices are increasing again, there is a potential risk of inflation, USD interest rates and international USD exchange rates are high, creating a big challenge for managing the balance between interest rates and exchange rates, and continuing to reduce interest rates to support the economy.

Bad debt tends to increase in the context of the credit/GDP ratio at the end of 2023 being 133%, posing potential financial risks. The ability of credit institutions to mobilize medium and long-term capital is still low compared to the long-term investment capital needs of the economy.

The results are very encouraging, inflation is not a concern.

At the meeting, experts agreed that the country's economic situation continues to have positive changes; emphasized that practice has proven that the results achieved in monetary and fiscal policies in recent times are very encouraging; said that "this year's inflation situation is not worrying"...

Analyzing the world and domestic situation, experts proposed solutions related to fiscal policy, monetary policy and banking activities; investment and construction policies including social housing; domestic stimulus policies, promoting exports, private investment; "pumping blood" into businesses, etc.

Experts also proposed to soon complete the legal framework to keep up with the shift of the world economy, especially in the fields of green economy, digital economy, circular economy, and improving labor productivity; affirming that the goal of "anti-goldenization" has been successful, proposing to remove the state monopoly on SJC gold bars, etc.

Agree on proposal to remove monopoly on SJC gold bars

After listening to the opinions, Deputy Prime Minister Le Minh Khai highly appreciated the economic experts and Council members for discussing and expressing many opinions with a high sense of responsibility, enthusiastically, and making many very important contributions.

Accordingly, opinions agreed with the proposals and recommendations of the State Bank; unanimously agreed that practice has proven that the monetary and fiscal management policies implemented in the past time are appropriate, achieving very encouraging results. Not only maintaining the set goals but also helping the economy stand firm in the face of seemingly insurmountable "shocks".

However, experts also commented that the country's economy still faces many difficulties and needs policy breakthroughs, especially in unlocking resources, promoting consumption, private investment, and managing the gold market... to develop steadily.

First of all, the management of fiscal and monetary policies in the coming time needs to continue to firmly maintain the goal of maintaining macroeconomic stability, prioritizing growth promotion, controlling inflation, ensuring major balances of the economy; implementing a reasonable and effective expansionary fiscal policy; promoting disbursement of public investment capital, attracting high-quality foreign investment capital; ensuring supply of goods, promoting consumption, developing the domestic market; effectively implementing solutions to promote exports.

Regarding gold market management, experts believe that after 12 years of implementation, Decree 24 has achieved success and fulfilled its mission. Opinions expressed agreement with the proposal to abolish the State monopoly on gold bar production and to grant licenses to produce gold bars to a number of qualified enterprises.

On behalf of the Government leaders, Deputy Prime Minister Le Minh Khai acknowledged and assigned the State Bank of Vietnam, the standing agency of the Research Council, to fully synthesize the opinions expressed at the meeting to synthesize and complete the report, propose solutions, and report to the Prime Minister.

At the same time, review and complete the legal framework, mechanisms and policies related to the gold market to develop a transparent, healthy, effective and sustainable gold market, contributing to promoting socio-economic development.

Resolutely upgrade the stock market; need "bolder" solutions for fiscal policy

Regarding fiscal policy, experts suggested that it is necessary to continue to have "bolder" solutions; resolutely implement solutions to upgrade the stock market "not to slow down this process because of some incidents", and also to accelerate solutions related to "green finance",... The Deputy Prime Minister assigned the Ministry of Finance to absorb, study and propose solutions to effectively use fiscal policy space, especially solutions related to taxes, fees,...

The Deputy Prime Minister requested that ministries and agencies, according to their assigned functions and tasks, closely monitor developments in the international, regional and domestic situations, especially inflation, price developments of fuels and strategic materials, and policy adjustments of countries and partners to proactively analyze, forecast, promptly update, and perfect appropriate plans and scenarios for direction and management, ensuring macroeconomic stability, controlling inflation, ensuring major balances of the economy, supporting production and business activities of enterprises and people, etc.

Deputy Prime Minister Le Minh Khai asked experts and members of the National Monetary and Financial Policy Advisory Council to continue to closely monitor developments in the world and the country, and continue to contribute opinions to the management work of the Government and the Prime Minister.

Source: chinhphu.vn