Vietnam: Gov’t asks central bank to reduce rates in June

The Government has asked the State Bank of Việt Nam to reduce regulatory interest rate and complete the allocation of credit limit within this month with the focus on removing the difficulties in accessing credits for enterprises.

HÀ NỘI – The Government has asked the State Bank of Việt Nam to reduce regulatory interest rates and complete the allocation of credit limits this month with a focus on removing enterprises’ difficulties in accessing credit.

The point was stressed in the Document No 225/TB-VPCP of the Government Office about solutions to stabilise the macroeconomy, control inflation, promote growth and ensure major balances of the economy.

Accordingly, the central bank must introduce practical measures to lower rates, especially reducing regulatory rates in June, to support enterprises and residents to recover production and business.

The central bank must also reconsider the credit growth limit to ensure the appropriateness to the real situation and complete the allocation of credit limits within this month as a basis for credit institutions to increase lending in the second half of this year, with the attention on credit for production and business and the real estate market.

The credit growth in the first five months of this year was disappointingly low. Statistics of the central banks showed that the credit growth rate was at 3.17 per cent as of the end of May over the end of 2022, compared with the rate of 8 per cent of the same period last year.

The central bank set the credit growth target at 14-15 per cent, a little bit higher than 2022 which was at 14 per cent. However, some experts said that the target was beyond reach, given the current economic difficulty.

Nguyễn Quốc Việt, Deputy Director of the Vietnam Institute for Economics and Policy Research (VEPR), said that whether Việt Nam achieved the growth target this year or not depended on both internal economic recovery and the recovery of the global economy.

The economy remained uncertain in the second half of this year, he said, adding that if there were no improvements in growth, it would be impossible to achieve the credit growth target, especially when the disbursement of public investment faced roadblocks.

Financial and banking expert Nguyễn Trí Hiếu said that it was necessary to develop a fund to provide a guarantee for loans of enterprises to promote lending.

For the real estate market, the central banks must raise policies to remove difficulties in credit for enterprises and projects, especially feasible and efficient projects.

The credit support packages of VNĐ40 trillion and VNĐ120 trillion should be reviewed for more reasonable loan requirements.

During the past three months, the central banks cut regulatory rates three times.

The most recent was on May 23, when the rates were cut by 0.5 percentage points and the ceiling rate for deposits of less than six month terms was reduced to 5 per cent, applied from May 25. –  VNS