The main difficulty is that these objectives are not always in the same direction.

During a working session with the State Bank of Vietnam (SBV) and credit institutions on August 13, PM Le Minh Hung requested that the central bank regularly quantify the "sweet spot" between controlling inflation and supporting growth by adjusting interest rates, exchange rates, money supply, liquidity, and credit at the right time, with the right dosage.

Efforts of the regulator

A notable decision during the first seven months of the year was that SBV did not lower policy interest rates to stimulate growth.

However, monetary policy has remained flexible. When the banking system needed additional funds, SBV injected capital through the open market, increased the buy order volume and extended maturities to as long as 91 days. Foreign exchange swaps were also used to provide additional liquidity.

The regulator is seeking to improve liquidity and create room for lower lending rates without having to cut policy rates.

Credit growth has also been given more room. As of July 31, outstanding credit stood at VND20.26 quadrillion, up 8.98 percent from the end of 2025.

Some loans were excluded from credit growth limits; the ceiling for using short-term funds for medium- and long-term lending was raised from 30 percent to 40 percent; and the share of State Treasury deposits counted in the ratio of outstanding loans to total deposits was increased from 20 percent to 50 percent.

The national economy’s demand for capital is enormous. Around 35 major and key projects alone have a combined borrowing demand of about VND1.7 quadrillion.

The PM also called for the 2026 credit growth target not to be treated as a “hard ceiling” at all times, while insisting that capital must reach the right sectors, at the right time, to the right borrowers, for the right purposes and at reasonable costs.

While expanding the economy’s access to capital, the exchange rate must also remain stable. Foreign exchange reserves may slightly increase year-on-year and remain at a level roughly equivalent to that at the end of 2025.

How much credit grows can be seen relatively quickly. But where that capital goes and how much growth it ultimately generates are what need to be monitored.

The constraints 

Expanding credit, however, comes with a challenge: deposit growth is slower than credit growth, while most funding remains short-term.

Deposits with maturities of one year or more are estimated to account for only around 20 percent of total deposits, while medium- and long-term loans account for about 47 percent of total outstanding credit.

Meanwhile, raising the ratio of short-term funds that can be used for medium- and long-term lending from 30 percent to 40 percent can provide additional capital in the short term but also increases maturity risk.

Credit needs to grow and businesses need cheaper loans, but banks still have to raise enough funds while being asked to lower both deposit and lending rates.

As credit continues to expand, where the money flows also matters. Official sources show that real estate credit is growing rapidly. Therefore, the requirement that “credit scale must go hand in hand with quality, and credit growth must go hand in hand with risk control” deserves particular attention.

Another constraint is inflation and the exchange rate. Average CPI growth in the first seven months reached 4.39 percent, relatively close to the full-year target of around 4.5 percent.

Meanwhile, the US FED has yet to cut interest rates, while US inflation has not eased as much as expected.

The room for sharp interest rate cuts in Vietnam therefore needs to be considered alongside pressure on the exchange rate and capital flows.

Against this backdrop, Decision 1413 dated July 27, 2026 sets the goal of developing a financial market with a “balanced and reasonable structure,” in which the capital market plays a stronger role in providing medium- and long-term funding for the economy.

The direction is clear: expand capital mobilization through shares and public bonds, while developing long-term investors such as investment funds, pension funds and insurance companies.

If the double-digit growth target is to be sustained for many years, capital requirements will become even greater. But the more capital the economy needs, the less feasible it is to place most of that burden on monetary policy.

Tu Giang