Rate cuts in the frame to spur growth


The Nation - - AEC -

THE State Bank of Viet­nam (SBV) will tweak mone­tary pol­icy this year to help achieve the tar­gets set by the gov­ern­ment and the Na­tional Assem­bly.

“The SBV will strongly fo­cus on the sta­bil­ity of the econ­omy, re­solv­ing busi­nesses’ prob­lems, con­trol­ling in­fla­tion, en­sur­ing liq­uid­ity of credit or­gan­i­sa­tions and sta­bil­is­ing mone­tary and cur­rency mar­kets,” the cen­tral bank’s deputy gov­er­nor Nguyen Thi Hong told me­dia in Ho Chi Minh City.

It would fol­low a pro-ac­tive and flex­i­ble mone­tary pol­icy, cut­ting in­ter­est rates and work­ing in close con­junc­tion with fis­cal and other poli­cies to con­trol in­fla­tion and sup­port eco­nomic growth, she promised.

“To achieve this year’s credit growth tar­get, the SBV must closely align with the gov­ern­ment’s macroe­co­nomic poli­cies … to make suit­able ad­just­ments from time to time.”

In the first half of this year credit fo­cused on pro­duc­tion (12–13 per cent growth in agricultural lend­ing), au­toma­tion and en­gi­neer­ing (24 per cent), tech­nol­ogy (20 per cent), sup­port­ing in­dus­tries (21 per cent) and im­port-ex­port (15.6 per cent).

“Lend­ing in the sec­ond half of this year will fo­cus on the gov­ern­ment’s pri­or­ity sec­tors such as agri­cul­ture, ex­ports, sup­port­ing in­dus­tries, small and medium-sized en­ter­prises, and tech­nol­ogy firms.”

Head of the cen­tral bank’s credit depart­ment, Nguyen Quoc Hung, said: “Lend­ing to risky sec­tors such as real es­tate, se­cu­ri­ties and con­sump­tion will be lim­ited.”

In the first half of the year in­ter­est rates on loans to sev­eral pri­or­ity sec­tors de­creased by 0.5 per­cent­age points to 4-5 per cent.

Viet­nam’s for­eign re­serves have risen sig­nif­i­cantly, and the SBV has said it would try to in­crease them fur­ther be­sides sta­bil­is­ing the forex mar­ket. Out­stand­ing loans have in­creased by 6.16 per cent this year.

At the end of last March bad debts in the bank­ing sys­tem had fallen to 2.18 per cent.

Ad­min­is­tra­tive re­forms are con­tin­u­ing, en­abling in­di­vid­u­als and en­ter­prises to ap­proach the bank­ing sys­tem. The Min­istry of In­ter­nal Af­fairs in fact said re­cently that the bank­ing sec­tor was lead­ing the index of ad­min­is­tra­tion re­form.

This is the third con­sec­u­tive year that the sec­tor has topped the index.

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