Broad money supply (M2) increased by 22%, above the central bank’s
target of 14%–16%, suggesting sufficient liquidity but lack of demand for
credit. Banks were cautious in extending credit due to ...
balance sheets, illustrated by rising nonperforming loans (NPLs),
and their concerns about the financial health of borrowers and other
banks. Firms and individuals hesitated to take on debt at a time of
weak domestic demand and a declining property market. Lending for
consumption, real estate, and marketable securities was only 4% of total
lending, well below the 16% cap on lending for these activities introduced
by the central bank in 2011.
The Viet Nam dong, after depreciating against the US dollar for
several years, traded within its official exchange rate band for most of
2012 (Figure 3.31.5). The more stable exchange rate mainly resulted from
lower inflation, positive real interest rates, stronger external accounts, a
cap on US dollar deposit interest rates, and lower domestic gold prices.
Fiscal stimulation of the economy was relatively modest in 2012.
Sources: State Bank of Viet Nam; ADB observations
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