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Vietnam banks struggle with bad debts

Vietnam banks struggle with bad debts

(21 June 2012 – Vietnam) Huge numbers of borrowers have defaulted on their loans, leaving the Vietnamese Government with 10 percent of total bad debt at the country’s banks. The stimulus that led to Vietnam’s huge economic growth the past decade has raised a huge problem of its own.

The government said the total bad debt in the banking system has hit US$13.3 billion or 11 percent of Gross Domestic Product. The bad debt problem has contributed to the abrupt slowing down of Vietnam’s economy.

The problem contributed to GDP growth sliding to 4 percent in this year's first quarter from an average of 7.7 percent from 2003 to 2008. Lax credit policies helped push inflation above 20 percent in 2011, one of the highest in Asia.

The government said dealing with bad debts is the main task among its plans to reform the country's banking system.
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