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The latest report from the State Bank, released on Wednesday, showed that the average lending interest rate paid by borrowers in the manufacturing sector decreased slightly in July, falling by 0.1-0.3 percentage points, while borrowing costs rose for the non-manufacturing sector, increasing by 0.5 per cent to an average of 19-25 per cent per year.
Lending in Vietnamese dong by commercial banks declined by 0.88 per cent from June, but lending in foreign currencies rose by 1.96 per cent. However, credit has grown by 7.57 per cent since the end of last year, well within the target for the year of credit growth not exceeding 20 per cent.
Binh denied to reporters that current monetary policy was tight. Rather, he said, it was being strictly controlled in order to keep inflation in check while simultaneously ensuring a reasonable rate of economic growth.
"Our labour force is large," Binh said. "If the economy does not achieve reasonable growth, social security will be affected."
Newly-appointed Minister of Finance Vuong Dinh Hue shared this view and vowed to manage fiscal policy strictly but flexibly in conjunction with monetary policy.
Binh also denied yesterday that the banking system was facing a US dollar shortage, noting that the central bank had purchased over US$4 billion since the beginning of the year and had sufficient reserves therefore to offset any dollar illiquidity that might arise.
"The State Bank will not let a dollar shortage happen," said Binh.
He said the State Bank would keep adequate supplies of Vietnamese dong in circulartion and maintain modest interest rates to encourage dong holders.
At June's Consultative Group Meeting, the International Monetary Fund estimated that Viet Nam's foreign currency reserves totalled $13.5 billion. However, that sum was equivalent to 1.5 months of imports, while the World Bank has warned that reserves should cover at least 2.5 months.
Source: VNS
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