Vietnam names new central bank governor, finance minister

By Phuong Nguyen, Khanh Vu and Francesco ‌Guarascio

HANOI, April 8 (Reuters) - ​Vietnam's parliament ​has approved career banker Pham Duc An as the new central bank governor for a five-year term and named a new finance minister, according to a list of government appointments published on Wednesday.

‌The change is part of a regular leadership turnover and is not expected to have a ⁠significant impact on monetary policy, but it comes at a delicate moment when central banks around the world grapple with an energy crisis ‌caused by the Iran war.

The change, reported ‌by Reuters in late March, follows the five-yearly congress of the Communist Party in January and the appointment of Le Minh Hung as the country's new prime minister on Tuesday. The central bank governor is a member of the government ​in Vietnam.

Among the other government members approved on Wednesday by the parliament was new finance minister Ngo Van Tuan, a long-time ministry official and lately the head of a public sector watchdog who focused on fighting corruption.

Phan ⁠Van Giang, who was viewed as a possible candidate for the state presidency, has also been confirmed as defence minister and promoted to deputy prime minister.

An, ​56, spent about two decades at the Bank for Investment and Development of Vietnam (BIDV), one of Vietnam's leading state-owned commercial lenders. He also worked at other banks, including the Vietnam–Russia ​Joint Venture Bank in 2011-14, according to Vietnam's government.

He replaces Nguyen Thi ‌Hong, who has led the State Bank of Vietnam (SBV) since 2020. During her tenure, the central bank oversaw the country's largest-ever bailout, injecting more than $25 billion into Saigon Commercial Bank over about two-and-a-half ⁠years after a run on the lender in October 2022.

INFLATION, GROWTH MANDATE

The SBV has a primary mandate to control inflation, with growth-supporting policies as a secondary objective. In recent years, however, it has repeatedly raised credit-growth targets, fuelling economic expansion as the Communist Party pushed ⁠for faster growth.

That unconventional credit-growth tool, which involves setting caps that effectively work as targets, is a key instrument the bank uses ​to conduct monetary policy.

Last year the credit-growth target for the banking system was raised to 20% from 16%, with specific goals for each bank. After concerns over asset-bubble risks, this year's target in January was lowered to 15%, although it is often adjusted during the year.

During ‌Hong's term, the SBV tried at times to soften the impact of political decisions that could pose risks to long-term stability.

Last year it warned about risks from a bid by leading conglomerate ‌Vingroup for a major railway project that would have transferred most financial risks onto the state budget. Vingroup later withdrew its bid.

"Growth ⁠must go hand-in-hand with inflation control and macroeconomic ‌stability, and stability will not be sacrificed ​for short-term growth," Hong said in one of her last public speeches in late March.

On Monday, she was appointed a deputy head of parliament.

(Reporting by Francesco Guarascio, Khanh Vu and Phuong Nguyen; Editing by ‌John Mair)

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