Dr. Vo Tri Thanh: “Banking and financial systems are still unhealthy”

Dr. Vo Tri Thanh said that the financial and banking system is not healthy enough, and it is still difficult to deal with weak banks, bad debts are increasing, and debts continue to increase. Banking and Finance Dr Vo Tri Thanh: “The banking and financial system is still unhealthy” Khuc Van • {Published date} Dr Vo Tri Thanh said the banking and financial system is not healthy enough and handles banking operations weakly. There are many difficulties, bad debts are increasing, and liabilities are increasing.

The financial and banking system is not healthy enough

When talking about the factors affecting Vietnam’s economy, Dr. Vo Chi Thanh said that the world economy is in a very unstable period. After the end of the Cold War, it has been a period of fierce confrontation since 1989.

Beyond the tensions, however, there are many interesting things about the world economy. During the crisis, trends were never discussed, not just political commitments but also market demands, green transformation, digital transformation, supply chain shifts.

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He believes that there are three economic headwinds in the short term: First, the recovery of the world economy is still difficult, Vietnam’s tourism and trade partners are still in the process of recovery, and there are still disputes about the recovery process or the US economic story.

The second feature is strict financial and monetary conditions. It is expected that there will be less pressure in 2024, inflation will fall, and interest rates will not rise and start a downward trend, especially in developed countries where interest rates are still high.

The third feature is geopolitics, climate change, national debt financial risks, many countries falling into technical defaults and other major risks.

As far as the Vietnamese economy is concerned, the financial and monetary economy has passed the most difficult period and is relatively stable, but there are still many problems: inflationary pressure, lower exchange rates and interest rates, stable bank liquidity, and stocks and bonds have experienced shocks and begun to recover.

But beyond that, the remaining problem is that the banking and financial system is not healthy enough, dealing with decades of weak banks remains difficult, bad debts are mounting, and on-balance sheet debt is now approaching thresholds. 3.4%, continuing the upward trend.

In addition, confidence in financial markets has not improved, usually corporate bonds, credit for people related to real estate stories, home purchases, home renovations… Nearly 64% of real estate credit is for individuals, but by 2023, individuals will hardly Increase.

“The most difficult period is over and hopefully the pressure from international factors will ease in the near future,” Mr Thanh said.

Regarding noteworthy factors, Mr. Thanh said that in recent years, especially by 2023, manufacturing and processing are no longer a growth driver. The most obvious manifestation is the decline in imports and exports, especially when a surplus of nearly 30 billion US dollars is achieved, the decline in imports and exports is also worrying.

Among imports, 40% are machinery and equipment, 30-35% are intermediate products, and a small part are consumer goods. Orders and markets are tight, and this is likely to continue this year. Although orders are better, there are still many uncertainties. If you look at the PMI index, there will only be 2 months above 50 in 2023.

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Meanwhile, the highlight of 2023 is public investment. According to the latest government report, 95% of the scheme has been disbursed by 2023.

In addition to fisheries, agricultural production is also an economic highlight. However, the growth rate of retail consumption has declined. At the beginning of the year, the consumption growth rate exceeded 10%, but at the end of the year, it only increased by 7%, driven by 12.6 million foreign tourists. Consumption, while still the mainstay, has begun to decline.

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Mr. Vo Tri Thanh said that in terms of policy, there are 3 basic policy groups in 2023 and 2024:

The first is to respond to monetary policy and the banking and financial systems to enhance economic resilience.

Through resolution groups, major corporate restructuring, legal and financial and monetary support, the real estate market has begun to develop, albeit slowly.

The second group of policies is to stimulate demand, ranging from policies to consume, issue visas, attract tourists, support workers, and attract domestic investment in addition to foreign investment. Another stimulus point is trade exports. Vietnam is about to sign multiple agreements and negotiate with multiple countries to have trade advantages.

Third, in spirit, corporate support policies such as tax cuts, debt freezes, no changes in debt categories, and low interest rates still need to continue.

The Prime Minister highlighted stories of updating old and existing ones but taking advantage of new opportunities. Vietnam needs to continue to improve its legal framework and promote the development of the new economy towards a circular economy and digital economy. Vietnam will complete 63 plans for Hanoi and cities. Hypertrophic cardiomyopathy…

At the same time, Vietnam is also preparing and formulating a strategy to attract eagles to Vietnam, involving fields such as technology and semiconductor chips…

Mr. Thanh believes that policies still need to respond to and overcome difficulties. We need to take a long-term view and take early action to reduce short-term and immediate difficulties.

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