The Vietnamese prime minister has urged banks to be more flexible in regard to lending without compromising standards.

Pham Minh Chinh has enlisted banks’ support to boost economic activity.

“We do not lower lending standards, but can we be more flexible?” said a government post on its website, citing Chinh’s statements at a conference in Hanoi. “The development of banks and businesses are linked together and allied with the development of the economy.” 

The latest remarks by the prime minister aim to bolster credit to support domestic activity, as subdued external demand impacts the country’s recovery. Chinh’s message to lenders follows from his deputy requesting an investigation into the functioning of the central bank during a credit growth slowdown, Bloomberg reports.

“There are companies facing difficulties, but their projects are feasible, can they borrow,” Chinh said during the conference, which was attended by bankers from 38 institutions to talk about ways for businesses to acquire faster credit.

The Vietnamese central bank has faced pressure to reduce borrowing costs to boost economic growth. Indeed, the State Bank of Vietnam has slashed policy rates four times in 2023.

Furthermore, loan growth in Vietnam stood at 8.21% as of 22 November, compared to last year. This is significantly lower than the government’s target for this year for credit growth of between 14% and 15%.

Last week, the central bank said it would increase the credit growth target for certain banks that have hit 80% of their lending quotas, as per a statement on the regulator’s website.

Between January and September this year, Vietnam’s economy grew 4.24%, falling short of the trend recorded over the last 10 years, not taking into account the pandemic.

The prime minister is aiming to return GDP growth to between 6% and 6.5% in 2024, from a forecast 5% in 2023.