Economy not short of funds but cannot absorb them: legislators

By Hoai Thu   October 24, 2023 | 08:38 pm PT
Economy not short of funds but cannot absorb them: legislators
An employee counts Vietnamese banknotes at a bank in Hanoi. Photo by VnExpress/Giang Huy
The economy does not lack liquidity, and even has an abundance of it, but cannot absorb it, lawmakers said.

Discussing the current socioeconomic situation on Tuesday, National Assembly deputies said policies need to be amended or else this situation would worsen next year.

Nguyen Thi Yen, standing deputy secretary of the Ba Ria Vung Tau Province Party Committee, said she is worried about the situation since credit growth is low, at only 6.92% in the first nine months, despite falling interest rates.

Nguyen Huu Toan, vice chairman of the National Assembly’s Finance and Budget Committee, said socioeconomic investment in the first nine months rose by 5.9% but mainly by the state sector, whose spending rose by nearly 12%.

Investment by the non-state sector was very low, increasing by 2.3% and equivalent only to a sixth of the amount in same period last year.

Investment by the foreign sector was also low.

The real estate market continued to be quiet and posed risks since many projects could not continue, negatively affecting other industries.

"The economy is not short of money, but the problem is that it cannot be absorbed due to low investment and low overall cash flow into the economy," Toan said. "These indicators show that the Government needs to change policies."

Nguyen Huu Toan, vice chairman of the Finance and Budget Committee of the National Assembly
Examining the government’s socioeconomic report card, Vu Hong Thanh, chairman of the NA Economic Committee, acknowledged the fact that capital absorption had been low though lending interest rates decreased.

The State Bank of Vietnam has adjusted policy interest rates four times so far this year, cutting them by 0.5-2 percentage points each time, but credit interest rates have only fallen by around 1 percentage point since the end of last year.

Many legislators were also concerned about growing bad debts in the banking system.

The central bank has reported that banks’ bad debts ratio was 3.56% as of the end of July, 2 percentage points higher than at the beginning of the year.

If the debts sold to the Vietnam Asset Management Company but remaining uncollected are included, the bad debts ratio could be as high as 6.16%.

Standing vice chairman of the Quang Tri Province people’s committee, Ha Sy Dong, feared bad debts would increase further when the central bank stops deferring loan repayments.

Nguyen Hai Nam, standing member of the NA Economic Committee, said the bad debt ratio of 3.56%, equivalent to VND440 trillion (US$18.3 billion) is "a sudden, worrying growth rate."

"If the Government does not ... promptly handle bad debts associated with restructuring weak banks, significant resources will be wasted."

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