The Standing Committee of the National Assembly (NA) has agreed to extend resolution No.42 on pilot bad debt management until the end of 2023, one year earlier than the proposal of the Government.

Overview of the discussion. Source: quochoi.vn

During the discussion held on April 14, Governor of the State Bank of Vietnam Nguyen Thi Hong said five years after implementing resolution No.42, Vietnam has achieved major results in resolving bad debts.

According to Hong, the bad debt ratio in the banking system was kept below 2%, while total bad debts of credit institutions as of December 31, 2021, declined by 17.2% against August 15, 2017, when the resolution was promulgated.

Total bad debts resolved under resolution No.42 from August 15, 2017, to December 31, 2021, averaged VND5.67 trillion (US$247.6 million) per month, higher than the figure of VND2.15 trillion ($94 million) recorded before the launch of the resolution.

As the validity of resolution No.42 is scheduled to end in the upcoming August, Hong proposed the NA extend its effectiveness until August 2024.

NA Vice Chairman Nguyen Khac Dinh agreed with the Government’s proposal but noted the extension period should only last until December 31, 2023.

For a long-term solution, Dinh called for the Government to finalize the legal framework for resolving bad debts.

“A resolution on bad debt management is only necessary for the short term when a special mechanism to prevent the bad debts from slipping out of control is required,” he said.

Dinh also questioned the necessity to have a specialized law on bad debt management and suggested the Government consider revising the Law on credit institutions.

In this regard, NA Chairman Vuong Dinh Hue noted during the extended validity of resolution No.42, that the Government is responsible for continuing to ensure the effective implementation of the resolution.

Hue noted the new validity period of resolution No.42 until December 31, 2023, is in line with the NA’s Resolution No.43 on economic recovery.