At the direction of the Prime Minister, the State Bank of Vietnam has raised the credit limits of several banks in order to make it easier to reach the country’s 15 percent credit growth target for the year.
Of note, Nguoi Lao Dong has reported that credit growth was sitting at just 11.12 percent as of November 22. This would mean banks would need to lend an additional VND 525.1 billion or US$20.7 billion (roughly 5 percent of Vietnam’s GDP) by the end of December.
This is an interesting decision with broad uncertainty around what might happen with respect to the US dollar when Trump assumes the presidency in January, though most economists are expecting a stronger dollar. Bad debts among Vietnam’s banks have also been rising and the country’s US dollar reserves have fallen below the IMF recommended three months worth of imports.
All of that is to say, continuing to pump money into the economy for the sole purpose of meeting a target that was set almost twelve months ago does not seem prudent.
See also: It’s Time to Talk About Vietnam’s Credit Growth Policy…