Vietnam cuts credit growth target to 15-17%, m2 to 12%

Vietnam lowered credit growth target to 15-17% from previous 20% and money supply (M2) to 12% from 16% as the country is facing highest inflation in Asia, Minister, Chairman of Government Office said at a press conference on Sept 26.

This move came out as 9-month economic conditions proved that inflation target of 18% and GDP growth rate of 6% are to be achieved provided that the Government continues to tighten monetary policies and to reduce public debts from their current too high level.

To effectively deploy the plan, the Government ordered relevant bodies to take actions to ensure liquidity in the banking system, to oversee commercial banks’ credit activities especially bad debts, to closely manage real estate loans, foreign currency exchanges and gold trading.

Public investments should be further reduced and only the most prioritized projects shall be funded to boost completion, Dam said, adding that total investments surpassing savings coupling with loose monetary policies are being blamed for high inflation.

Vietnam inflation stands on top in Asia

Consumer price index in Vietnam mounted 22.42% in September, still maintaining its top spot in inflation figures for the whole region even after easing from 23.02% in August, the GSO data showed.

Vietnam regulators have been trying different measures to tame inflation this year. Prime Minister Nguyen Tan Dung in February cut the credit growth target to below 20 % from 23 % and M2 target to 15- 16 % from 24 %.

The central bank also raised key rates in 9 times to current 14% from 7% in last November to limit lending growth.

Given these actions, the Asian Development Bank forecast Vietnam’s inflation to hit 18.7 % this year, the Economist Intelligence Unit expected the country’s inflation to average at 18.9%.
Source Scarlet D. I Analyst I StoxPlus

Tags: Vietnam banking industry, Vietnam credit growth, Vietnam finance, Vietnam financial

Posted by VBN on Sep 27 2011. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry