Vietnam will try to address economic challenges in 2013 as inflation risks persist, bad loans weigh on banks and rising inventories hurt businesses, Prime Minister Nguyen Tan Dung said.
Domestic concerns include bad debt that has crimped bank lending, "shortcomings in the government's management" and "economic structure weaknesses," Dung in his New Year's message posted on the government's website on Tuesday. Vietnam is "determined to fix weaknesses, overcome difficulties, continue to curb inflation and ensure growth, aiming for sustainable development," he said.
Vietnam is struggling to boost an economy that expanded at the slowest pace in 13 years in 2012 as a slump in bank lending crimped domestic demand, adding pressure on the government to revamp the financial system. Dung has identified the debt overhang at banks as an obstacle to economic growth.
Government ministers and the central bank are discussing detailed plans to tackle bad debt, including the establishment of a debt asset management company, Dung said Dec. 26. Such a company may help resolve about VND100 trillion (US$4.8 billion) of non-performing loans, according to a Dec. 26 posting on the government's website.
"Credit growth may still be slow in the first few months this year, so fiscal policy will play a decisive role in boosting demand in the economy," Dung said. Ministries "need to quickly implement planned projects to spur demand in production and businesses" in coordination with the central bank to control inflation, he said. The restructuring of banks and state companies also need to be accelerated, he said.
The country's inflation slowed for the first time in four months in December, with consumer prices rising 6.81 percent from a year earlier after climbing 7.08 percent in November, according to preliminary figures from the General Statistics Office.