Vietnam has cut the bad debt rate in its banking system to 6% from the 8.82% reported late September last year, said a government official.
Rate of bad debts reduced to 6%
Speaking with reporters outside the government’s regular meeting held on February 28, Minister and Chairman of the Government Office, Vu Duc Dam, said that despite the Vietnam Asset Management Corporation having yet to be established, the government’s drastic actions have been effective in reducing the amount of bad debt in the system.
However, he added that credit growth was reduced by 0.16% during the first two months of 2013, while the target for credit growth this year has been set at 12%.
At the government’s regular meeting, Prime Minister Nguyen Tan Dung urged the State Bank of Vietnam to take stronger actions to restructure banks and deal with bad debts through setting up hedge funds and rearranging terms of bad debt.
Dam added that also among these fiscal priorities for the government is the reduction of interest rates, which should ease some of the difficulties facing businesses.
He also said that between January and February this year, up to 8,600 companies ceased operations, compared to 8,000 newly-licensed businesses over the same period. This, he said, indicates that there is some trouble in the production and business sectors in terms of getting capital for domestic companies.
Vietnam has set a target to post an economic growth of 5.5% while continuing to curb inflation to numbers lower than what the nation saw last year.
February’s inflation rate rose by only 1.32% from January, bringing the two-month index to 2.59%, the General Statistics Office said, explaining that a sufficient supply of essential commodities during the week of Tet halted the trend of increasing prices in February. This same phenomena has been seen in previous years.
Inefficient operations prompted businesses to cut Tet bonuses by an average 10% compared to 2012. The sluggish recovery of the economy also impacted people’s spending during Tet. In addition, the price stabilisation programme and sufficient supplies of essential commodities in big cities undoubtedly helped keep prices down.
