Central bank to continue strong monetary policy

September 08, 2011 | 11:16

(0) user say

The State Bank of Vietnam (SBV) will continue its close and flexible policy to control money supply, ensure credit growth below 18 per cent, stabilise exchange rates, and reduce lending interest rates in the remaining months of this year.

SBV Governor Nguyen Van Binh made the statement in Hanoi at a September 7 conference to outline the banking sector’s key tasks from now to the year-end.

Binh stressed the need to create a consensus between SBV and commercial banks and credit institutions on implementing measures to control credit growth, interest and exchange rates and the gold market.

In the short-term, lending regulations for the non-production sector will be maintained, which requiring credit institutions to reduce loans for this sector by the end of this year. The SBV will also inspect credit institutions that recorded high credit growth and a high ratio of foreign capital use.

Additionally, the VND deposit rate ceiling will be kept at 14 per cent per year to create conditions for credit institutions to lower lending rates to 17 – 19 per cent for the production and trade sectors. The foreign currency deposit rate ceiling for organisations and individuals will also be maintained.

In the face of fluctuations in domestic and global gold prices, SBV will submit solutions to the Government to stabilise the gold market in the short-term and to mobilise gold in the economy to increase the state foreign currency reserves, especially a decree on managing gold production and trade.

In the past eight months, with close and cautious monetary policy, credit provision for the production sector rose 14.7 per cent, for rural and agricultural development climbed by 30.5 per cent, for exports increased 35.02 per cent, and reduced by 16.95 per cent in the non-production sector.

By the end of August, some credit institutions had lowered lending rates to 17-19 per cent for the production sector.