Vietnam to miss target growth for business loans

Despite assurances to the contrary from the government, Vietnam will not loan as much to private business as it planned.

An interest rate cut in the first quarter of 2012 by the State Bank of Vietnam has not seen more funds going to private business but has instead gone to state-owned enterprises.

Despite this, State Bank of Vietnam Governor Nguyen Van Binh is optimistic about lending more to businesses in 2012.

He said businesses loans grew 1% in March 2012 and that “. . . with the average growth rate of 1.5-2 % per month, the targeted credit growth rate of 15-17 % by the end of the year proves to be within the reach.”

Vu Viet Ngoan, Chair of the National Finance Supervision Council, however, said it would be very difficult to reach the 15-17% credit growth rate this year.

“The credit may grow by 5-6% at maximum in the second quarter of 2012, while the figure would not be able to reach 12-13% in the last six months of the year to raise the credit growth rate to 15-17% in the whole year as expected,” Ngoan said.

Associate Professor Dr. Dao Van Hung, Director of the Policy and Development Institute, agreed with Ngoan and said that considerable problems will make it difficult to attain the monthly growth rate of 2%.

Other economists have said Vietnam will not reach its growth rate target of 17% this year, because it needs to focus on fighting against high inflation.