The World Bank has designed a four-year technical co-operation plan to help Vietnam deal with bad debts.   

During a meeting with the World Bank, Governor of the State Bank of Vietnam Le Minh Hung said they had carried out the first phase of the banking restructuring programme for the 2011-2015 period and successfully improved and made the sector more stable.

For the second phase which will be carried out during 2016-2020 banking restructuring will remain the SBV's top priority. The bank has submitted the plans to restructure credit institutes and weak banks to the Politburo and the National Assembly.

Hung hoped that the World Bank will continue to help them with fund, technology and experience in dealing with bad debts.

Ceyla Pazabassiouglu, Senior Director for the Finance and Markets Global Practice of World Bank, appreciated the achievements of the State Bank of Vietnam, saying that banking restructuring was a step in the right direction considering the situation in Vietnam.

Pazabassiouglu promises that the World Bank would always stand by and support Vietnam in dealing with bad debts and banking restructuring to improve the sector's transparency and efficiency.

Experts from the World Bank also said dealing with bad debts was complicated because of the number of involved parties including the Ministry of Finance, Ministry of Justice, the banks, and audit agencies.

The experts warned about stagnant economy, weakened credits, ineffective credit institutes, liquidity risk if bad debts are not dealt with. Cooperation is needed in order to manage and control bad debts.

According to the World Bank, Vietnam needs long and comprehensive plan to deal with four major problems including modernising the finance sector, issuing more detailed regulations and monitoring over the banks, restructuring the banks and sub-standard assets, and providing better monitoring of the macro economy.

The World Bank has designed a four-year co-operation plan and is negotiating with sponsors.

dtinews