Prime Minister Pham Minh Chinh, speaking at the latest government meeting on loosening monetary policy, said that money supply should be increased through more lending and lowering of interest rates.

Dau Anh Tuan, secretary deputy general of the Vietnam Confederation of Commerce and Industry (VCCI), said they should address the most serious problems of the national economy. 

“I can imagine that enterprises are just like dry fields and the government is trying to generate sources to water the fields,” Tuan said.

He said that in 2022, cash flow was the biggest problem for many enterprises, including capital from corporate bonds. Meanwhile, enterprises also had to cope with other difficulties, including the decrease in the number of orders and high interest rates.

“Recently, interest rates have increased to more than 10 percent per annum at times. How can businesses make such a high profit to cover loan interest rates?” Tuan said.

The priority solution lies in monetary policy. It is necessary to lower interest rates and increase money supply to help businesses borrow money.

The State Bank of Vietnam (SBV) has slashed operating interest rates four times this year. At many government meetings, the Prime Minister has urged the government to slash interest rates.

“If businesses lack capital, they won’t be able to maintain operations and grow, which will affect economic growth – a very important goal. If so, this will affect the labor market and jobs, impact state budget collections, and in the long term, affect the existence of businesses,” Tuan explained.

Phan Duc Hieu, Permanent Member of the National Assembly Economics Committee, emphasized coordinating monetary policy and other policies. The current monetary and fiscal policies, such as tax payment deadline extensions, aim to help enterprises encounter difficulties. 

However, the policies won’t bring the desired effects if they cannot be implemented in harmonization with other policies such as VAT refunds. It is also necessary to think of removing obstacles and simplifying administrative procedures.

Though inflation has been controlled well recently, some economists warn that the factors causing inflation still exist, and that monetary policy loosening may pose risks for inflation, bad debt, and the safety of the banking system.

Vo Tri Thanh, Director of the Institute of Brand Development and Competition, said ensuring microeconomic stability is an important task, but the current conditions allow policy re-orientation in both fiscal and monetary policies, with a focus on solutions to support growth. 

“For monetary policy, opinions about how loose it should be still varying. Regarding the interest rate, I agree with the government’s plan that the interest rate could decrease further by 1-1.5 percentage point by the end of the year,” he said.

The safety of the banking system must be ensured in any situation. In addition to liquidity, if money becomes ‘easy money’, growth in production and business may be affected. This will be a great challenge for the central bank. Circular 06, which has been released by the State Bank of Vietnam, says commercial banks must supervise cash flow to prevent risk, including money flow to risky fields like securities and real estate.

“I think inflation is not a big problem. Instead, it is necessary to pay attention to two issues – where the cash flow is going and the exchange rate. I can say for sure that there is still room for monetary policy loosening and interest rate cuts,” Thanh said.

Regarding the Prime Minister’s instruction on designing a credit package for forestry and seafood production and processing, SBV said a package of VND15 trillion with preferential interest rates has been set up.

Tuan Nguyen