Support businesses to overcome difficulties
Three months after storm No. 3, Mr. Hoang Xuan Hung’s business in Do Son, Hai Phong - operating in the fields of restaurants, hotels and transportation - has returned to stable operations. This recovery is a testament to the effectiveness of support policies from the banking sector, especially Agribank Do Son, through interest rate reduction and creating conditions for additional loans.
Mr. Hung is one of 94,000 customers who were severely affected by the natural disaster. The storm destroyed many properties, from electric cars, restaurants to aquaculture cages. Thanks to timely support from the bank, he quickly restarted his business, contributing to the local economic recovery.
According to the leader of the State Bank of Vietnam (SBV), credit institutions (CIs) have accepted to reduce profits to share difficulties with businesses and people. This is a testament to their commitment to accompany customers in challenging times.
Monetary policy management in challenging context
Looking back at 2024, Party Central Committee member and Governor of the State Bank of Vietnam Nguyen Thi Hong said that last year, the world economy still faced many unpredictable fluctuations, strongly affecting Vietnam. Global growth showed signs of recovery but slowly, inflation decreased but remained high, international interest rates remained high despite the pressure being reduced thanks to the Fed's interest rate cut. The foreign exchange market fluctuated strongly, with international gold prices at times exceeding 2,700 USD/ounce after Donald Trump was elected President of the United States. These factors put great pressure on monetary policy and exchange rate management in Vietnam.
Domestically, the economy will recover in 2024, but will still face difficulties. Fluctuations in the real estate market, corporate bonds and high gold prices will affect the banking sector, requiring a balance between controlling inflation, supporting growth, reducing interest rates and stabilizing exchange rates.
The Governor of the State Bank emphasized that the close direction of the Party, State and Government with many documents and telegrams has supported the banking industry to overcome challenges and promote sustainable economic development.
The results of 2024 show that monetary policy management has contributed to stabilizing the macro-economy and controlling inflation. It has supported liquidity for credit institutions and stabilized the money and foreign exchange markets.
Creating motivation and foundation to bring the country into a new era
In interest rate management, the State Bank continues to maintain the operating interest rates, creating conditions for credit institutions to access capital at low costs, thereby supporting the economy. Credit institutions are directed to reduce costs to reduce lending interest rates, and at the same time report and publicize the average lending interest rate, the difference between deposit and lending interest rates on the website. To date, the lending interest rate level has decreased by about 0.96%/year compared to the end of 2023.
Exchange rates are managed flexibly, coordinated synchronously with monetary policy tools, helping the foreign exchange market to be stable and fully meet the needs of the economy. Exchange rates move in both directions, increasing/decreasing, in accordance with market conditions.
In credit management, the State Bank assigned credit growth targets for 2024 to credit institutions from December 31, 2023, adjusted twice on August 28, 2024 and November 28, 2024 to meet capital needs in a timely manner under controlled inflation conditions. Credit institutions are required to direct capital to production, priority and growth drivers, while strictly controlling risky sectors. Thanks to synchronous solutions, credit in the whole economy increased by 12.5% compared to the end of 2023.
The State Bank of Vietnam has implemented large credit programs such as: 120,000 billion VND for social housing, workers, apartment renovation; credit for forestry, fisheries and support to overcome the consequences of storm No. 3 as mentioned above.
"In the context of many positive signs of macroeconomic recovery, economic growth continues to recover, the credit growth target for 2024 is achievable," said Deputy Governor of the State Bank of Vietnam Dao Minh Tu.
Deputy Governor of the State Bank of Vietnam Dao Minh Tu also emphasized that this year's rapid credit growth was achieved thanks to the combination of many factors, notably the active and synchronous management from the central to local levels, especially the Government and the Prime Minister from industry to macro economy; the harmonious fiscal and monetary policies helped businesses boldly invest and borrow capital, increasing the economy's ability to absorb capital.
In gold trading management, the State Bank has controlled the difference between SJC gold bar prices and world prices within a suitable range, maintaining the stability of the credit institution system, ensuring the rights of depositors and controlling bad debt in a difficult context.
Regarding non-cash payments and digital banking, the State Bank continues to improve the legal framework, creating favorable conditions for digital transformation and ensuring security and safety. Financial communication and education activities are promoted, contributing to raising awareness and skills in using online banking services.
The monetary and banking legal system is focused on completion, meeting practical requirements and international standards. The State Bank is developing and submitting documents guiding the implementation of the Law on Credit Institutions 2024 to ensure consistency and effectiveness in implementation.
Looking forward to 2025, SBV Governor Nguyen Thi Hong said: "This is the last year to implement the socio-economic development plan for the 2021-2025 period, which is of special importance in preparing for the new Government term, creating momentum and foundation to bring the country into a new era of development, an era of the Vietnamese people's rise."
The Governor of the State Bank affirmed that the unit will focus on key tasks, specifying groups of solutions to achieve the set goals, improving the effectiveness of monetary policy management and banking operations in the coming time.
(Posted on the special edition of Lao Dong Xuan At Ty)
