In 2016, the world economy is expected to be exposed to uncertainties. Even fiscal and monetary policies of some major economies in the world also show signs of unpredictable movements. Meanwhile, the limited room for policy and limited financial resources will negatively affect the health of Vietnamese economy, said the National Finance Supervisory Commission (NFSC) at a recent seminar on release of an overview report on financial market in 2015 in Hanoi.
Former Governor of the State Bank of Vietnam, Mr Cao Sy Kiem, said bad debts at banks are now a real problem. If bad debts continue to be hidden by book methods, this nuisance will hang on for years to come.
Remarking on the tool the Government took to deal with the issue, former SBV Governor Le Duc Thuy said, right in 2013, the year when Vietnam Asset Management Company (VAMC) was set up to purchase debts, it was said that this was a way for authorities to accomplish unreal achievements as it solved almost nothing. VAMC's operations only technically solved the issue by lifting bad debts out of balance sheets while those bad debts were still, in essence, not recovered, thus not helping banks and businesses to improve their financial situations.
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Dr Vu Viet Ngoan, NFSC Chairman
Vietnam's economy saw dual economic achievements in 2015: Inflation was controlled (0.63 per cent) while economic growth was still relatively high (over 6.5 per cent). These are prerequisites for Vietnam's economy to maintain rapid and sustainable growth in the future.
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Speaking more frankly, banking and financial specialist Nguyen Tri Hieu said that the objective of bringing the bad debt ratio of the entire banking sector to 3 per cent was realised at the end of 2015 as expected and this work did not seem too hard for banks. However, that figure only helped beautify the books and bad debt settlement had not been solved and the recovery progress was very slow.
Dr Nguyen Xuan Thanh, Director of the Fulbright Economics Teaching Programme, noted that many banks are mobilising new deposits to pay interests of old deposits while interests from loans are recorded entry on the books but they have been paid by borrowers. And, this means that many banks are now feeding their bad debts. Margins on lending are now only technically written. He pointed out that it is important to alert the danger of estimated accrual interests to the system because banks' profits mainly come from this operation. This was not only seen in weak banks but also in bigger ones.
In response to the remark that the interest rate may be raised 1-2 per cent in 2016, Dr Nguyen Duc Thanh, Director of Vietnam Institute for Economy and Policy Research (VEPR), said the interest rate is forecast to increase towards the end of the year because Vietnam has not solved fundamental economic issues. To lower interest rates, inflation must drop. At present, low inflation is caused by falling crude oil and food prices. And, in the medium and short terms, if we lack effective macroeconomic regulation tools, inflation may rebound. Then, it will be harder to lower interest rates.
Vietnamese
