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Bad debt fixes start to show progress say fiscal experts

Update: November, 17/2012 - 10:37

HA NOI (VNS)— The nation's attempts to solve bad debt may have improved slightly, said Vo Tri Thanh, deputy director of the Central Institute for Economic Management at a banking conference on Tuesday.

Thanh affirmed that dealing with bad debt was vital to clearing congested credit flow, but he said it wasn't necessary to clear all bad debt.

While total bad debt stands at around US$12 billion, he said solving 70 per cent of the amount, or about $8 billion, would possibly be enough to facilitate economic development.

State Bank of Viet Nam Governor Nguyen Van Binh said at a Q&A session early this week that financial institutions had increased their risk management assistance fund value to VND75 trillion ($3.7 billion), and he would instruct them to add even more when needed.

The $3.7 billion provisional amount would enable financial institutions to deal with a significant portion of bad debt themselves, Thanh said, and the Government would only need to deal with the remaining $4 billion.

Thanh reaffirmed that the country wouldn't need to borrow money from the International Monetary Fund for this process, but noted that it would be very important that the Government assure transparency in dealing with areas with the most bad debt, including State-owned enterprises and real estate firms.

He predicted that a series of programmes would be defined between now and the end of the year while banking authorities were continuing to take prompt actions. "In the next few months, the State Bank will continue to step in for banks that can't deal with their own problems themselves."

"If everything goes smoothly, the programmes will start in the next quarter," he added.

Binh said that some progress had been made so far, with about VND252 trillion ($12 billion) worth of debt having been reallocated out of VND2,700 trillion ($128 billion) of the total outstanding. — VNS

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