Vietnam plans to raise credit growth cap

HANOI, Nov 18 (Reuters) – Vietnam will consider lifting the ceiling on its credit growth, its prime minister said, as the economy comes under pressure from rising interest rates and tighter credit conditions. credit.

The move aims “both to ensure the safety of the banking system and macroeconomic stability while boosting economic growth,” Pham Minh Chinh said in a statement posted on the government website on Friday.

Vietnam previously capped credit growth at 14% this year. Chinh did not specify how much the cap would be raised.

The country has one of the fastest growing economies in Asia, backed by strong manufacturing and robust exports. Its economic expansion is also heavily dependent on strong credit growth.

Vietnam’s economy has rebounded from the COVID-19 pandemic, but has recently faced many challenges, with weaker global demand and a stronger US dollar prompting the central bank to raise policy rates by 200 basis points. combined base and allow the dong to weaken against the dollar.

The rate hikes, coupled with the government’s decision to tighten rules on corporate bond issuance and restrict their refinancing, left the economy facing a credit crunch.

Chinh asks the banking and financial sectors to “find measures to deal with the difficulties and correct the inappropriate rules”, the government statement said on Friday.

Reporting by Khanh Vu; Editing by Kenneth Maxwell

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