Vietnam's central bank expects credit growth to reach 17-18 percent

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Lending of the banking sector as of November 20 expanded 14.03 percent and credit growth for the whole year would reach 17-18 percent, according to the central bank.

Loans in foreign currencies increased 2.8 percent in the period, in accordance with the government's monetary policy against dollar hoarding, Deputy Governor Dao Minh Tu of the State Bank of Vietnam said at a cabinet meeting on Tuesday.

The central bank has targeted credit growth of between 18 and 20 percent this year, up from 17.26 percent in 2015.

Some policymakers said the target was quite high and risky for the economy. In response, Tu said bank loans remain a key source of funds for the economy, arguing that lower growth of 15-16 percent would mean that local businesses would be faced with critical capital shortages to expand their business and production.

The central bank has also aimed to bring down bad debts in the banking system to below 3 percent of total outstanding loans this year.

Vietnam's economy was orginally expected to grow 6.7 percent this year, compared to 6.68 percent in 2015. However adverse weather conditions and a fish kill disaster along the central coast have forced the government to revise down the 2016 target to between 6.2 and 6.5 percent.

At the cabinet meeting, the central bank’s deputy governor also rejected speculation of a devaluation of the Vietnamese dong.

Last week, the central bank said it stood ready to stabilize the dong/dollar exchange rate by selling dollars if necessary, after the dong fell to a five-month low against the U.S. currency.

The dong has been under mounting pressure in recent weeks as investors bet on a stronger dollar on the global market.

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