Banking & Finance

According to the Price Management Department at the Ministry of Finance, the unusually volatile petrol price is not the biggest obstacle in controlling inflation in 2022. Flexible coordination between monetary policy and fiscal policy is the first and foremost solution in controlling inflation.

The Ministry of Finance (MoF) and the State Bank of Vietnam (SBV) signed a regulation on March 9 on a mechanism for buying and selling foreign currencies between the State budget and foreign exchange reserves, in order to balance foreign currencies for the State budget. Vietnam currently posts a trade surplus and has record-high foreign exchange reserves. According to the BIDV Securities Company (BSC), the country’s foreign exchange reserves stood at $105 billion at the end of 2021. It has also forecast that foreign exchange reserves will remain abundant this year.

Data from the State Bank of Vietnam (SBV), which consists of bad debt ratios, credit growth rates, international balance of payments, and foreign currency market movements, will be updated regularly on its website.

The State Bank of Vietnam (SBV) is drafting a Prime Ministerial Decision on loans offshore and facilitating Vietnamese institutions lending overseas. One of the basic principles is that lending must comply with local regulations on currency, foreign exchange, investment, and taxation, and with the laws of the country or territory of the borrower and guarantor as well as relevant international treaties.

It has been forecast that the bad debt ratio in the banking system may increase in the near future as Covid-19 is still to be brought under control. While waiting for the Law on Handling Bad Debts of Credit Institutions to be developed, the State Bank of Vietnam (SBV) has proposed extending the application period in Resolution No. 42, on handling the bad debts of credit institutions, by three years, to August 15, 2025. Resolution No. 42 from the National Assembly is valid for five years from August 15, 2017.

The credit balance in February was down by VND96 trillion ($4.1 billion) while cash outflows seen before the Lunar New Year (Tet) returned, meaning less stress on liquidity in the banking system. This is most evident in the decline in interbank interest rates.