Monetary policy under greater pressure

May 28, 2013 | 17:00

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The government will help ignite the economy by cutting the lending rate to allow credit growth to reach 12 per cent in 2013, after a low level in 2013’s first five months.

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The prime minister has just released Instruction 09/CT-TTg on financial and budget management in 2013, under which the State Bank is required to continue reducing lending rates, for credit growth of 12 per cent for the whole year. It should also focus on lending in priority sectors, carrying out restructuring plans for credit institutions and stepping up addressing the bad debt problem.

According to the State Bank's Monetary Policy Division, up till May 22, credit growth rose by 2.29 per cent year-on-year. It is expected to reach only 3 per cent by the end of May.

Despite improvements during the same period of 2012 when credit growth stayed negative, this level is considered low compared to the 12 per cent target for this year.

Since March 2012 till now, the State Bank has cut interest rates eight times and consecutively lowered the ceiling Vietnam dong rate. In early May, the State Bank governor called for banks to consider reducing lending rates for old loans down to 13 per cent per annum.

In fact, many experts said to lower lending rates to support enterprises, the government and the National Assembly should consider tightening targeted inflation to 7-8 per cent, instead of 6-6.5 per cent as currently.

By Nguyen Trang

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