The banking sector is pumping nearly VND8,100 trillion (US$350.24 billion) into the economy, leading to credit growth of around 13.5 – 13.7% in 2019, according to Le Minh Hung, governor of the State Bank of Vietnam (SBV), as reported by VnEconomy.

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There has been a positive shift in the credit structure that provides strong support to economic growth, with a major part of outstanding loans channeled into priority fields such as agricultural sector with lending of VND2,000 trillion (US$86.49 billion), small and medium enterprises with VND1,500 trillion (US$64.87 billion) and industry with VND1,500 trillion (US$64.87 billion), said Hung at a government’s online conference on December 30.

Hung said the SBV, the country’s central bank, has been flexible in managing the monetary policy, aiming to address both short-term issues as well as mid- and long-term ones. This would be the basis for Vietnam to achieve economic growth targets set by the National Assembly and the government.

According to Hung, core inflation rate fluctuated 1.4 – 2% in the 2016 – 2019 period, indicating flexible and efficient management of monetary policy.

Meanwhile, Vietnam bought in US$20 billion in 2019 and injected VND500 trillion in return to the economy, taking the foreign exchange reserves to a record high of US$79 billion. With prudential management, the FX purchases did not cause major impacts on inflation, stressed Hung.

Since the beginning of the ongoing government term in 2016, the SBV bought a total of US$48 billion to build up the country’s foreign exchange reserves.

Hung pointed to the huge capital needs of the economy for development, for which the SBV has gradually reduced the lending rates to support the business community. As of present, the ceiling interest rate for the five priority fields is 6% per annum.

Regarding bad debts, Hung stated the banking sector has been giving priority in resolving the issue, taking the rate of bad debts and potential bad debts from 10.8% by the end of 2016 to 4.9% as of the end of 2019.