VietNamNet Bridge – A series of commercial banks have got the
nod from the State Bank of Vietnam to lift the ceiling credit growth rates.
However, economists have warned that this could be a double edge knife, because
it may lead to high inflation and high bad debt ratio.
Joys and worries
When granting more “quotas” for
credit growth limits to some commercial banks, the State Bank strives to pump
more capital into the national economy which has been thirsty for capital.
Since businesses cannot access
bank loans, they do not have working capital to maintain production. A lot of
businesses have been bankrupted; others keep production at a moderate level to
drag their miserable existence.
TienPhong Bank has announced the
ceiling credit growth rate of 27 percent in 2012. The same quota has been
granted to OceanBank. Especially, VP Bank has got the nod to have the 30
percent credit growth rate in 2012, which means that the bank would have had
the outstanding loans of 51 trillion dong by the end of the year. HD Bank has
also got the credit growth limit of 30 percent.
The State Bank, in its press
release, also informed that it has allowed some commercial banks with healthy
financial situation to have the higher credit growth rates than previously
planned.
The watchdog agency has reassured
the public that even if the commercial banks can use up their credit growth
quotas, the credit growth rate of the whole banking system in 2012 would not
exceed 15 percent in 2012. Therefore, this would not cause the pressure on the
inflation.
Some officials believe that the
credit growth rate in 2012 of the whole banking system would be 8-10 percent
only.
However, Vu Dinh Anh, a
well-known finance expert, said that the targeted growth rate of 15-17 percent
by the end of the year proves to be unattainable, because banks only have five
months ahead to push up credit.
Anh also said that if the lending
increases by 8-10 percent this year as expected, this would be a threat to the
national economy. The credit has been growing slowly so far this year, which
means that in order to obtain the 8-10 percent growth rate for the whole year
2012, banks would have to push up the disbursement.
As such, a big sum of money would
be pumped into the national economy within a short time, which may lead to the
high inflation and high bad debt ratio.
Anh stressed that the credit
growth rates have been always very high in recent years, about 30 percent per
annum. The overly high credit growth rate, plus the ineffective capital use
both have led to high inflation.
High inflation and bad debts become obsession
Le Tham Duong, a finance expert,
on one hand, believes that Vietnam has to push up credit to boost GDP growth,
on the other hand, warns that the credit expansion may lead to a double-dip
recession.
Also according to Duong, the
outstanding loans should increase by 6-8 percent in 2012 to be able to revive
businesses and obtain the targeted GDP growth rate. However, he has warned that
the credit expansion may cause a side effect – double-dip recession, which he
predicts may occur in early 2013.
The National Finance Supervision
Council has also warned about the possible high inflation, if capital is pumped
rapid fire into circulation. If the credit grows by 1.5 percent a month in the
last months of the year (9 percent for six months), the GDP would grow by 5.3
percent. If so, the monthly inflation rate would be 0.5-1 percent.
Phuoc Ha
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