Vietnam says 2022 monetary policy will support recovery, contemplates bad debts

HANOI, Dec.28 (Reuters) – Vietnam’s monetary policies in 2022 will aim to contain inflation, while supporting the country’s economic recovery, the central bank said on Tuesday, as a deputy governor warned of the risk of a further increase in productive non-loans.

The Southeast Asian country’s economic growth has traditionally relied heavily on increased credit, although authorities have attempted to reduce this dependence.

Total bank loans to Vietnam as of December 22 increased 12.68 percent from the end of 2020, according to a statement from the State Bank of Vietnam.

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Credit growth in Vietnam next year is expected to reach around 14%, deputy central bank governor Dao Minh Tu said at a press conference.

Tu said inflation this year will be well below the 4% target, adding that the country’s foreign exchange reserves are now over $ 100 billion.

Tu said the ratio of non-performing loans in the banking system is increasing due to the coronavirus pandemic and could increase further.

“The ratio of loans potentially classified as bad debt is around 8.2%, and this could even increase further if the pandemic lasts longer,” Tu said.

The government has official economic growth targets of 6.5% for this year and into 2022, but some analysts have warned that due to the pandemic, growth this year could be 3% or less.

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Editing by Ed Davies

Our standards: Thomson Reuters Trust Principles.

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