Prime Minister Le Minh Hung was scheduled to hold a working session with the State Bank of Vietnam (SBV) and the credit institution system regarding interest rates, credit, exchange rates, and overarching systemic safety today. He’ll simultaneously review petitions and solutions aimed at dismantling prevailing hardships and regulatory entanglements, thereby contributing to propelling economic growth and macroeconomic stability.
Lately, the Government, the Prime Minister, and Deputy Prime Ministers have issued frequent directives instructing the SBV to deploy sweeping measures to boost capital supply capacities. The ultimate goal is to clear systemic bottlenecks so enterprises can better access and absorb capital, all while strictly controlling credit quality, mitigating bad debts, and safeguarding the financial system to get the ball rolling on economic recovery.
In a concerted effort to successfully realize the ambitious double-digit economic growth target for 2026, unblocking credit capital flows remains one of the most critical driving forces to supercharge production and business operations.
However, as stated by Deputy Prime Minister Nguyen Van Thang during his August 10 working session with ministries, agencies, localities, banks, and enterprises regarding capital access obstacles, sustainable growth is impossible if Vietnam relentlessly expands credit at all costs or irresponsibly lowers lending standards.
He noted that credit growth must invariably go hand in hand with robust credit quality and systemic safety. Furthermore, authorities must unblock capital flows, slash capital costs, and fundamentally innovate lending methodologies. They shouldn’t let enterprises possessing excellent projects, viable markets, and solid repayment capabilities fail to access funds merely due to redundant procedures and unnecessary conditions.
To bolster capital supply capabilities, the SBV has proactively executed several technical plans, such as bumping the State Treasury deposit ratio within the LDR (loan-to-deposit ratio) to 50 percent and raising the short-term capital ceiling for medium and long-term lending to an accommodative 40 percent. These strategic adjustments have demonstrably helped meet the additional capital demand of approximately VND1.7 quadrillion (US$65.3 billion) required for 35 key national projects.
Nevertheless, pumping up the credit supply only solves one side of the equation. The economy’s inherent absorption capacity ultimately dictates the true efficiency of these capital streams.
A glaring paradox persists today, where numerous enterprises still struggle immensely to access capital while the banking system makes concerted efforts to expand credit. Consequently, the root solution isn’t to recklessly lower credit standards, but rather to revolutionize appraisal methodologies by evaluating debt repayment capabilities and business efficiency much more meticulously.
Instead of leaning too heavily on collateral assets, banks can progressively enhance their evaluations based on actual cash flows, commercial contracts, purchase orders, administrative governance, and the genuine underlying “health” of the borrowing enterprise. Seamlessly connecting and sharing legal data regarding taxes, electronic invoices, customs, and credit histories will undeniably act as the master “key” for banks to establish a firmer foundational basis for client appraisal, thereby confidently expanding credit without ever compromising strict safety benchmarks.
Despite these efforts, bank credit can’t sustainably serve as the sole capital supply channel for the entire economy, particularly concerning medium and long-term funding demands. While the mobilized capital of credit institutions is predominantly short-term, the appetite for medium and long-term capital remains colossal, perpetually imposing stringent maturity risk control imperatives upon financial institutions.
Therefore, running parallel with bank credit, the stock market, corporate bonds, and alternative capital mobilization channels desperately need to be developed healthily to effectively share the massive financial pressure currently bearing down on the credit system.
On the corporate side of the spectrum, proactively consolidating internal operational capacity holds decisive significance. Businesses honestly can’t expect banks to loosen their lending conditions if they haven’t yet achieved financial transparency, elevated their governance capabilities, or utilized capital for its strictly intended purposes. Forging a sterling credit reputation alongside a healthy business culture is essentially a priceless intangible asset that empowers enterprises to effortlessly secure funding at reasonable costs.
Unblocking capital flows inevitably demands highly synchronized coordination among the Government, the banking sector, and the business community. Within this framework, dismantling legal bottlenecks outside the immediate banking realm such as land regulations and zoning plans will serve as a crucial catalyst ensuring that money flows noticeably faster and exactly in the right direction.
Ultimately, credit growth and systemic safety aren’t opposing objectives. The core issue dictates that boosting capital supply capabilities must concurrently align with elevating absorption capacity, appraisal quality, and stringent risk control. Pushing credit without lowering standards and expanding capital streams without letting toxic bad debts accumulate are the only genuine way for credit to sustainably emerge as a powerful engine for enduring economic growth.
