Photo: Thanh Duc
New lending rules from SBV expected to boost economy in cautious manner.
The maximum ratio of short-term deposits used for medium and long-term loans will remain at 60 per cent until December 31 this year, according to Circular No. 06 issued on May 27 by the State Bank of Vietnam (SBV).
This ratio will be reduced to 50 per cent from January 1, 2017 and 40 per cent from January 1, 2018, under the SBV’s Circular No. 06, which was introduced to monitor property lending.
On the same day the SBV issued Circular No. 07, allowing lenders to resume offering dollar loans for short-term purposes to certain exporters. Both new circulars are to replace the previous Circular No. 36.
The central bank has asked banks to ensure that short-term funding is extended to exporters until the end of this year, effective from June 1. In order to secure short-term dollar loans, exporters must prove that they are able to create dollar revenues so they will be able to repay their debts.
In December last year the central bank scrapped the interest rate ceiling on dollar deposits offered by banks to both companies and individuals, which previously stood at 0.25 per cent. For the first time, dollar deposits at banks in Vietnam earn zero interest.
The move has been viewed as an attempt by the central bank to back up the economy, which has seen slower-than-expected growth during the first five months of 2016.
Last April, Prime Minister Nguyen Xuan Phuc set a target for GDP to grow 6.7 per cent this year. But growth in the first quarter of 2016 was reported at 5.46 per cent by the General Statistics Office (GSO).
Based on the current status of the economy, local economists estimate that Vietnam’s GDP growth may only be around 6.17 per cent in the second quarter.
At a meeting with concerned ministries and agencies on May 30, PM Phuc reiterated the government’s determination to reach the macro-economic goals previously set for this year. “[We are] determined to achieve the targets set earlier,” PM Phuc said, and asked ministries and agencies to establish specific action plans.
He also emphasized the mobilization of both internal and external resources for economic growth, with the main focus being on the disbursement of capital to basic infrastructure projects. Equitization or selling government shares in State-owned enterprises must be boosted, to secure resources for economic growth, the PM said.
Capital from official development assistance (ODA), government bonds, and other sources in the national budget must be disbursed effectively into necessary projects, he said, asking relevant ministries and agencies to form a working group to address disbursement issues. “In GDP growth, attention should also be paid to quality, not only to quantity,” he told the meeting. “[We have to] care about people in remote areas as well as those affected by natural disasters, floods and drought.”
In a quick response to the new circulars, the Bank for Investment and Development of Vietnam (BIDV) said it believes that Circular No. 06 will ease the difficulties facing enterprises and carefully manage inflation by gradually tightening credit to the real estate market and build-operate-transfer (BOT) and build-transfer (BT) transport projects. “Circular No. 07 will also help foreign currency liquidity for exporters,” BIDV analysts wrote in its latest report, released on May 30.
- short-term loans
- property mortgage