Central bank unveils monetary policy for second half of 2019

The State Bank of Vietnam (SBV) will continue to follow a pro-active, flexible and cautious monetary policy as well as working in close conjunction with fiscal and other policies to control inflation, sustain the macro-economy and support economic growth in the second half of this year.

Customers make transaction at Bao Viet Bank in Hanoi’s Tran Hung Dao Street.(Photo: VNA)
Customers make transaction at Bao Viet Bank in Hanoi’s Tran Hung Dao Street.(Photo: VNA)

SBV Deputy Governor Nguyen Thi Hong made the statement at a conference in Hanoi on June 13 to review the SBV’s monetary policy in the first half of 2019 and announce its key orientations for the second half of the year.

Pham Thanh Ha, Director of the SBV’s Monetary Policy Department, said the SBV would help stabilise the monetary market through the use of open market operation (OMO) measures to regulate liquidity among credit institutions.

At the same time, the central bank would also regulate the interest rate and USD/VND exchange rate policies in line with the Government’s targets and market movements, Ha said, adding the SBV would take intervention measures when necessary to stabilise the local foreign currency market.

According to the SBV, by June 6, the central bank’s USD/VND daily reference exchange rate rose by 1.03% against the end of 2018 to VND 23,060 per US dollar. The dollar meanwhile was listed at VND 23,355 for buying and VND 23,475 for selling at Vietcombank, up 0.86% and 0.99% against end-2018, respectively.

Assessing the monetary policy management in the first half of 2019, Hong said the monetary policy was effective, contributing to controlling inflation, stabilising the macro-economy and supporting economic growth.

According to the SBV, in the context of global uncertainty and local inflation, the managing of interest rates and exchange rates was positive and in accordance with macro-economic development. The liquidity of the banking system was good while the operation of the inter-bank market was also smooth.

Nguyen Quoc Hung, Director of the SBV’s Credit Department, reported that total means of payment until June 10 this year increased by 5.17% against the end of 2018.

This year, the central bank targets a 13% increase of total means of payment and credit growth of 14%, but adjustments could be made.

“The credit growth in the period expanded by 5.75%, with focus on the Government’s five prioritised sectors of agriculture, exports, spare-parts industries, small- and medium-sized enterprises, and hi-tech firms, while limiting the capital to risky industries,” Hung stated.

According to the SBV, the credit growth to date has been reasonable and positive with a focus on production and business, which has contributed to the restructuring of the agricultural sector as well as the development of fishery and spare-parts industries as well as small- and medium-sized firms, export and high-tech firms.

At the event, Nguyen Trong Du, Deputy Chief Inspector of the SBV’s Banking Supervision Agency, said that credit institutions cleaned up VND 907.33 trillion (US$ 38.87 billion) of non-performing loans (NPLs) from 2012 to the end of the first quarter 2019, of which VND 163.14 trillion (US$6.98 billion) worth was settled in 2018 alone.

“With the results, the total NPL ratio of the entire banking system, excluding NPLs sold to the Vietnam Asset Management Company (VAMC), was at 2.02% by the end of March; and the value, including NPLs sold to the VAMC was 5.88%,” Du said.