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Government probe launched into Vietnam’s central bank re: credit growth

Over the weekend it was announced that there would be a government probe into the State Bank of Vietnam’s (SBV) handling of the country’s credit growth, Tuoi Tre is reporting. This was in response to complaints that credit was not growing fast enough. The target is 14 percent, however, as of November 22 it had reached just 8.21 percent.

A few key points of note for context:

  • In 2022, credit growth hit its 14 percent limit in October which mean that banks could  no longer lend to businesses;
  • Unable to borrow from conventional banks business looked to other means to raise capital, including selling assets, simply not paying outstanding debts, or borrowing from the black market;
  • As a result, when the credit limit was reset at the start of the year many businesses no longer qualified for conventional loans.
  • On top of that, export orders have slowed considerably since the end of last year, which has seen business burn through inventories of raw materials rather than borrow more; and
  • Interest rates have come down considerably but this has had little impact–it looks as though the problem is on the demand side not the supply side.

See also: Demand needs to be addressed in VN’s economic recovery, too

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