Treasury’s idle funds deposited at banks proposed to raise at year end

The Ministry of Finance has proposed allowing the State Treasury to temporarily raise the cap on idle funds deposited at commercial banks, a move aimed at easing liquidity pressures during the year-end period.

The proposal is included in a Government resolution on adjusting the limit for using temporarily idle State funds for term deposits at commercial banks, drafted by the State Treasury.

Under the proposal, the maximum proportion of idle funds deposited by the State Treasury at commercial banks could be increased from the current 50 per cent to 60 per cent until February 28. After that date, deposited funds will be maintained until maturity, but the balance must be brought back within the existing 50 per cent cap by March 31.

Temporarily idle State funds refer to money that has not yet been disbursed but already has designated expenditure purposes.

According to the Ministry of Finance, while raising the limit would increase pressure on the ministry to meet State budget payment needs in a timely and complete manner, including social security spending and investment capital disbursement, the adjustment would support the State Bank of Vietnam (SBV) in stabilising banking system liquidity during the year-end period and the Lunar New Year 2026. This would help ease pressure on market interest rates, stabilise the macroeconomy and contribute to achieving growth targets.

Credit growth in the banking system has accelerated in recent months, while capital mobilisation has lagged behind. An SBV report showed that as of December 24, credit had risen 17.87 per cent compared to the beginning of the year to VNĐ18.4 quadrillion (US$700 billion). By contrast, capital mobilisation grew by only about 14 per cent. This gap has put significant strain on banking system liquidity, particularly ahead of the Lunar New Year when seasonal demand for capital increases.

In response, the SBV has rolled out measures to stabilise the market, while the Ministry of Finance has deposited temporarily idle funds at commercial banks up to the current 50 per cent ceiling.

However, liquidity in the money market has at times remained tight, pushing up interbank interest rates. Short-term rates of under one month in the interbank market have occasionally stood at 6.5 to 7.5 per cent per year, markedly higher than levels below 5 per cent seen in the first half of the year.

Adjusting the maximum deposit limit is therefore both necessary and urgent, the Ministry of Finance said, adding that it will proactively manage deposit balances to ensure liquidity safety and compliance with the prescribed ceiling.

The ministry also said it will continue to coordinate closely with the SBV on synchronising fiscal and monetary policy management, supporting economic growth while maintaining macroeconomic stability.