Vietnam’s Prime Minister Pushes for Proactive Monetary Policy to Boost Growth in 2024

The Prime Minister of Vietnam Pham Minh Chinh signed a comprehensive directive on May 2 focusing on removing difficulties for production and business, promoting growth and macroeconomic stability.

Vietnam's 2023 economic performance showcased a stable macroeconomy, controlled inflation, ensured major economic balances, a stable currency, and controlled public, government, and foreign debt, as well as budget overspending, the directive says.

2024 Goals

However, it reiterates the year 2024 is pivotal in accelerating progress towards achieving the 5-year Plan (2021-2025) goals. The strategy rests on "five increases" and "five decreases."

The top priorities are increasing access to credit (especially for medium-sized and small businesses), removing legal hurdles, enhancing credit quality, strengthening coordination between the state, financial markets, and businesses, and boosting transparency in interest rates and combating predatory lending.

Simultaneously, the focus is on reducing lending interest rates to reasonable levels, cutting operational and transaction costs, streamlining administrative procedures, minimizing unnecessary complexities, and decisively curbing negativity and group interests within the financial system.

Additionally, the plan lays out "five accelerations and breakthroughs." These include expediting digitalization, raising service quality, enhancing human capital within the banking system, modernizing banking infrastructure, and better serving production and business needs to create jobs and propel economic growth.

Key Measures

The State Bank of Vietnam will proactively monitor the global and domestic economic landscape to ensure flexible, responsive, and effective monetary policy management. The bank will also intensify its oversight of the gold market, gold trading enterprises, and credit institutions.

Credit institutions will be directed to prioritize lending for production, business, and key growth drivers while continuously striving to lower lending interest rates.

The Ministry of Finance will maintain a focused expansionary fiscal policy, working closely with monetary policy and other macroeconomic initiatives to support growth, stabilize the economy, control inflation, and ensure major balances.

To address issues within the housing and real estate sectors, the Ministry of Construction will expedite the review and revision of relevant laws and regulations. The Ministry of Planning and Investment will continue enhancing the effectiveness of the Small and Medium Enterprise Development Fund.

The Ministry of Industry and Trade's mandate is to further diversify export markets, products, supply chains, and production networks. The Ministry of Public Security will collaborate with the State Bank of Vietnam to prevent and address cross-ownership and manipulation within credit institutions.

The Ministry of Natural Resources and Environment will prioritize submitting detailed implementing legislation for the Land Law and Water Resources Law. Further, the Ministry of Agriculture and Rural Development will coordinate with other agencies to streamline procedures for veterinary drug declaration and compliance.

Finally, the People's Committees of provinces and centrally-run cities will work closely with banks, enterprises, and citizens to create a favorable environment for banking activities, particularly credit operations and payment services.

Prime Minister Pham Minh Chinh's directive heralds a proactive and dynamic approach to economic governance in Vietnam. With a strategic focus on growth, stability, and efficiency, the directive sets the stage for sustained progress and resilience in the face of evolving challenges.

As Vietnam navigates the complexities of a rapidly changing global landscape, the government's commitment to effective monetary policy management remains steadfast, underpinning the nation's journey towards prosperity and development.