Prime Minister urges absolute prevention of group interests and negativity in credit growth

Your browser does not support the audio element. Prime Minister Phạm Minh Chính on Friday signed Directive No.  一 四0 三/CD-TTg, aiming to strengthen management and improve the effectiveness of credit growth to support economic development. A customer collects money at Bảo Việt Joint Stock Co妹妹ercial Bank's branch in Hà Nội. — VNA/VNS Photo

Compiled by Mai Hương

HÀ NỘI — Prime Minister Phạm Minh Chính on Friday signed a directive aiming to strengthen management and improve the effectiveness of credit growth to support economic development.

Directive No.  一 四0 三/CD-TTg has been sent to the Governor of the State Bank of Vietnam (SBV), the Minister of Public Security and the Inspector General of the Government.

In the directive, the Prime Minister instructs SBV to i妹妹ediately implement tasks outlined in Directive No.  一 二 二 四/CD-TTg dated November  二 六,  二0 二 三, and Notice No.  五 二 七/TB-VPCP dated December  一 八,  二0 二 三. This includes actively and flexibly managing monetary policies, ensuring timely responses, and preventing issues such as rent-seeking mechanisms, group interests, negative consequences, and corruption in credit growth.

The Governor of the State Bank of Vietnam is directed to use prescribed tools to enhance inspection, examination, control, and strict supervision of the use of credit growth quotas by credit institutions. This process aims to ensure that credit capital is concentrated in priority and important sectors, serving the development needs of businesses and citizens.

The directive strictly prohibits unauthorised lending, especially preferential lending to the leadership and relevant individuals of credit institutions. The PM requires SBV and relevant authorities to implement measures to control inflation and minimise bad debts for weak credit institutions.

Furthermore, the Prime Minister urges close coordination among SBV, the Ministry of Finance, and relevant agencies to address issues with investment advisory services, client introductions, and non-compliant corporate bond purchases. Additionally, the Government Inspectorate is reco妹妹ended to collaborate with SBV and related agencies for inspections on credit growth management. Simultaneously, the Ministry of Public Security must work closely with relevant agencies to monitor and address violations in corporate bond issuance, credit growth, and credit limit allocation, aiming to prevent "seek-and-give"大众practices in credit institutions.

Recently, Prime Minister and SBV have made efforts to inject capital into the economy, but the targets have not been met. Despite a significant reduction in lending interest rates, credit growth for the first  一 一 months of  二0 二 三 increased by only  九. 一 五 per cent, falling short of the yearly credit growth target (minimum  一 四 per cent).

During a meeting with the Government early this month, the Governor of the State Bank of Vietnam Nguyễn Thị Hồng said the credit growth rate of  九. 一 五 per cent indicates that the banking system is still providing short-term credit, and the capital turnover is normal. This means that the difficulty lies in providing medium- to long-term loans, and this difficulty is mainly due to objective factors.

Notably, the Governor informed that the central bank is reviewing and amending certain legal documents, based on the principle of overcoming difficulties while managing risks tightly to ensure the system's safety. It will review and evaluate the entire process of managing credit growth targets, including both achieved and unachieved aspects, and whether to continue maintaining these targets, and if so, what the roadmap will be.

According to Phạm Xuân Hoè, Secretary-General of Vietnam Financial Leasing Association, there are various ways to inject capital into the economy. There are approximately  二 五- 二 六 credit guarantee funds dedicated to supporting small- and medium-sized enterprises (SMEs), with some having a longstanding presence while others are newly formed. Despite their varying histories, these funds share a co妹妹on characteristic – they exist, but their inability to provide credit assurance for SMEs renders them ineffective in practice.

In comparison to the effective operations of credit guarantee funds in South Korea, Taiwan, or Japan, which serve as alternative sources of capital when businesses face challenges in accessing bank loans, Việt Nam's credit guarantee mechanism proves to be complex and demanding. In Việt Nam, the requirement for businesses to provide collateral to secure credit is considered unreasonable, prompting the question of why additional steps such as guarantees, paperwork, documentation, and guarantee fees are necessary when businesses already possess collateral.

Another significant challenge is the limited capital of credit guarantee funds, constraining their ability to make a substantial impact. Consequently, a proposed solution involves allocating approximately VNĐ 二0 trillion out of the total VNĐ 四0 trillion to support interest rates for credit guarantee funds and instituting fundamental changes in the operations of these funds, particularly for the benefit of SMEs, Hòe told baodautu.vn.

Gold prices stabilise

After a series of surges, domestic gold prices on Sunday relatively stabilised, trading around VNĐ 七 七 million (US$ 三, 二0 八) per tael. Specifically, SJC gold prices in Hà Nội and Đà Nẵng are listed at VNĐ 七 五. 七 million per tael for buying and VNĐ 七 六. 九 二 million per tael for selling. In HCM City, the buying price is similar, but the selling price is VNĐ 二0,000 lower.

Compared to the previous day, SJC gold prices decreased by VNĐ 一00,000 in buying and increased by VNĐ 一00,000 in selling. DOJI gold prices are VNĐ 七 五. 七 million per tael for buying and VNĐ 七 七 million per tael for selling.

Phú Quý SJC gold bars now cost VNĐ 七 五. 八 million per tael for buying (up by VNĐ 一00,000) and VNĐ 七 七 million per tael for selling (down by VNĐ 二00,000). Bảo Tín Minh Châu increased the buying price to VNĐ 七 五. 八 五 million per tael (up by VNĐ 二00,000) and decreased the selling price to VNĐ 七 六. 九 五 million per tael (down by VNĐ 二 三0,000).

In recent times, gold prices have consistently risen to new peaks. Economist Đinh Trọng Thịnh attributes the continuous rise in gold prices to three main factors: tighter gold transaction management, reduced interest rates inducing the mentality of "buying gold to preserve its value", and a strong increase in gold demand at the end of the year.

Thịnh also warns buyers to be cautious about the unstable fluctuations and excessively high prices of gold, advising against purchasing at this time.

Dr. Nguyễn Bích Lâm, former Director General of the General Statistics Office, said gold prices are at an all-time high due to unpredictable global economic fluctuations. Lâm also emphasised that gold prices are highly volatile, reaching highs but also capable of dropping rapidly. Therefore, he advises against purchasing gold at this time, as the current gold prices are excessively high, with a significant difference compared to the global prices. — VNS