Agricultural production gets credit priority

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This statement was made by SBV Governor Nguyen Van Binh in an exclusive interview with the Vietnam News Agency on Nov. 21.

Restoration of production in natural disaster and flood-prone areas is vital and is followed in priority by the such fields as export production, support industries and small and medium enterprises, he said.

In implementing the top priority, banks must not only meet demands of normal loans, but also look to activities relating to construction of rice, aquatic and agricultural product processing facilities and appropriate storage facilities, Binh added.

Credit growth in the whole banking system has risen 10 percent and is expected to increase to 12-13 percent in the remaining months of this year, with whole-year credit growth estimated to be 15 percent.

The National Assembly has approved socio-economic goals, along with a credit growth target of 15-17 percent for the next year and SBV will manage and instruct commercial banks to follow the target, contributing to economic development with an economic growth rate of 6 percent.

On the interest rate for 2012, the Governor stressed the requirement to curb inflation, saying that the Government, ministries and agencies have exerted efforts to tame inflation and as a result, the inflation rate has declined from August. However, inflation remains high. The country is striving to keep inflation rate at 18.5 percent in the final months of 2011.

The SBV and commercial banks have since August made every effort to lower deposit interest rate to 14 percent and maintain loan interest from 16-18 percent.

Binh affirmed the economy’s need for an interest rate cut, but said that the reduction must be conducted along with curbing inflation.

To ensure macro-economic stability for the next year, banks need to closely monitor their monetary activities, he said. However, they should engage in careful assessment of non-production items such as real estate, securities and consumption.

The Governor affirmed the importance of the real estate market for a developing economy like Vietnam , describing it as a driving force for socio-economic development. However, he noted, it is necessary to control the market’s operation and prevent a bubble and if the market is frozen it will have an impact on the economy and social security.

In addition, the consumption sector needs due attention, he said, adding that SBV will seek to adopt a more appropriate policy which encourages market development in a balanced manner.