Cutting interest rates on top priority

The goal of cutting the dong interest rates should be prioritized and achieved at any cost, the Thoi Bao Kinh Te Sai Gon reported September 20.

The goal of cutting the dong interest rates should be prioritized and achieved at any cost, the Thoi Bao Kinh Te Sai Gon reported September 20.

With the utmost goal of bolstering the local economy, cutting interest rates should be on top priority.

Borrowing costs almost eat up local firms’ profits the TBKTSG reported, citing that Vietnamese enterprises’ rates of return range from 10%-15% while lending interest rates are much higher than the target 12% p.a, not only highest in the region but also top in the world.

When the Circular 13/2010/TT-NHNN issued by the State Bank of Vietnam (SBV) comes into effect on October 1, it would drain liquidity in the economy, said the senior economist Bui Kien Thanh, adding that interest rates are expected to rise further if money flows continue to shrink.

Therefore, it is the SBV’s responsibility to ensure sufficient credit for a sustainable domestic economy growth, said Thanh.

Provisions of Circular 13 should be revised to support for the utmost target of slashing deposit and lending dong interest rates to 10% and 12%, respectively, helping to ensure the year targets of total money supply (M2) expansion of 20%, credit growth +25% and GDP growth +6.5%. – Stoxplus.com

Tags: vietnam bank, Vietnam finance, Vietnam financial, Vietnam interest rates

Posted by VBN on Sep 21 2010. 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