The banking sector's priority is to prevent the government from being caught off-guard by monetary policy, to ensure smooth currency circulation, and to avoid capital shortages for individuals and businesses in need of banking system support.

Overview of the meeting. Photo: VGP

Prime Minister Pham Minh Chinh made the remarks at the year-end meeting of the State Bank of Vietnam (SBV) on January 8.

At the meeting, the Prime Minister commended the efforts of the SBV for its significant contribution to the government's goals of macroeconomic stability, inflation control, ensuring large balances, and stabilizing the foreign exchange market and exchange rates.

In particular, in 2023, the amount of deposits in the banking system by citizens and economic organizations reached over VND13,500 trillion (US$554.4 billion), while credit growth expanded by 13.71% by the end of 2023.

The value of the Vietnamese dong remains stable compared to other currencies in the region. These positive outcomes have been highly appreciated by reputable international organizations, so the economy will continue to receive positive ratings, he noted.

However, Chinh suggested the year 2024 holds great significance in implementing the 5-year economic and social development plan for 2021-2025, in which the banking sector would play a crucial role in the country's quick and sustainable advancement.

He also stressed the importance of innovation, increased efficiency, and effectiveness in the inspection, examination, and supervision of banks to timely prevent, detect, and handle risks, existing issues, and misconduct, thus contributing to ensuring security and discipline in the monetary and banking market.

"The Government's stance is to protect the legal and legitimate rights and interests of economic entities, avoiding criminalization of economic relations but strictly dealing with wrongdoing," Chinh asserted.

For her part, SBV Governor Nguyen Thi Hong acknowledged that 2023 continued to be a challenging year for the Government's management of macroeconomic and monetary policies. Global inflation declined but remained high, prompting many central banks worldwide to tighten monetary policy. Fluctuations in the US dollar, oil prices, and gold, along with the collapse of some banks in the US and Europe, were factors that affected the economies and currencies of various countries, including Vietnam.

Against this backdrop, the SBV adopted a coordinated and flexible approach to monetary policy tools to regulate the currency reasonably, contributing to controlling inflation at 3.25%, below the National Assembly's target of 4.5%. The exchange rate remained stable, with the Vietnamese dong depreciating by less than 3%, and the state foreign exchange reserves improved.

“This was achieved through a harmonious combination of interest rate management, exchange rate adjustments, and monetary regulation in line with real-world developments,” Hong said.

Despite high global interest rates, the SBV adjusted interest rates four times and maintained ample liquidity to assist credit institutions in reducing lending rates. This brought new lending interest rates back to the pre-Covid-19 levels, down by more than 2% compared to the end of 2022, Hong noted.

A customer at National Citizen Bank - Hanoi Branch. Photo: Pham Hung/The Hanoi Times

Channel lending to priority sectors

According to Hong, the global and international economic outlook for 2024 is expected to remain complex.

In response, Hong expected the central bank to continue to closely monitor global and domestic economic developments and to proactively and flexibly coordinate monetary policy tools in harmony with other macroeconomic policies.

“The goal is to support economic growth while controlling inflation, thereby contributing to the stability of the macro-economy, the monetary and foreign exchange markets, and the banking system,” she noted.

The credit growth target for 2024 is set at around 15%, with appropriate adjustments based on actual developments and the real situation. At the same time, the SBV will continue to instruct credit institutions to focus on lending to priority sectors and growth drivers (investment, consumption, and exports) as directed by the government, while tightening control of credit in potential risk areas.

Ramachandran As from Citibank Vietnam, representing the foreign banks group, expressed high appreciation and congratulations to the Government and the SBV for an impressive year in leading and managing monetary policy and banking operations.

Representative of Citibank Vietnam Ramachandran As

The achieved economic goals include a GDP growth of 5.05%, higher than the global average, and successful inflation control at 3.8%. Vietnam attracted the highest FDI in the past five years, consolidating its position as a top attractive investment destination and a potential manufacturing and trading partner, he said.

Ramachandran emphasized that these accomplishments are crucial amidst global inflationary pressures, particularly, the State Bank's close monitoring and timely interventions which have helped maintain economic stability and ensure consumer price stability.

He added that the international community's trust and high regard for Vietnam's achievements and the functioning of its monetary policy is clear evidence. Notably, the US Treasury continued to affirm that Vietnam does not manipulate its currency, leading to an improvement in Vietnam's credit rating in 2023.

Vietnam was also honored as one of the world's top three countries in the Global Central Bank Assessment Report.

Ramachandran As expressed foreign banks' optimism for Vietnam’s economy in 2024 and hoped the country would continue to its ongoing effort to refine legal frameworks, mechanisms, and policies in the banking sector to meet international standards.