Sunday, 19 Nov 2017

IMF highly regards Vietnam’s monetary policy

Updated at Friday, 27 Oct 2017, 19:27
The Hanoitimes - In the sideline of the Asian Pacific Economic Cooperation (APEC) Financial Meetings, the Deputy Managing Director of the International Monetary Fund (IMF) Mitsuhiro Furusawa has highly regarded Vietnam’s current economic situation and monetary policy management of the State Bank of Vietnam (SBV).
According to Mr. Mitsuhiro Fukusawa, Vietnam’s economic growth rate in recent years has been steadily high, inflation rate under control, the monetary policy and foreign currency exchange market in stable.

At the same time, banking reform has significantly improved and thus, IMF saw the determination of SBV in modernizing the monetary policy framework, putting up effort in dealing with non – performing loans (NPL) and restructuring the banking system. Information from the General Statistics Office (GSO) showed that, as of September, GDP growth rate is 6.41%, while industrial growth rate is 7.9%; the total revenue from the retail sector and services up 10.5%; total export value up 19.8%; Consumer Price Index (CPI) up 3.79% and inflation rate up 1.45%. 

The monetary performance indicator for the first 9 months is suitable with macro economy. According to statistics of the SBV, as of September 20, credit growth at 11.02% compared to the same period of 2016 – a high growth rate in recent years (the growth rate at 2016 was 10.46% and in 2015 was 10.78%). Credit growth is mainly for the purpose of business and production. Meanwhile, lending for some priority fields are also increased compared to the same period of 2016. Specifically, credit growth for agriculture and rural development at the end of August is 1.2 trillion VND, up 17% compared to the same period of 2016, and contributing to 20.2% of the total credit growth of the economy. 

Credit growth for the 4 remaining priority fields (as of the end of August): credit growth for production and manufacturing is 207 trillion VND, up 8.14%; for high tech enterprises is 35 trillion VND, up 25.12%; for priority industrial sectors is 153 trillion VND, up 18.9%; for small and medium enterprises (SME) is nearly 57 billion USD, up 7.49%. With regard to interest rate, SBV has instructed credit institutions to be actively implementing solutions to reduce costs and expenses, increasing efficiency in operation to reduce interest rate for priority fields. Results from implementing consistently solutions, credit institutions has reduced 0.5% per year of the interest rate for short term loan in priority fields. Besides, credit institutions also reduce interest rates for purpose of business and production with a decrease of 0.5 – 1% per year, reducing interest rate for some mid term and long term loan programs in priority fields from 8% per year (previously was 9 – 10.5% per year). 

​Credit institutions also implement credit package for short term, mid term and long term with preferential interest rate for essential sectors in the economy, applying interest rate in short term for qualified customers of 4 – 5% per year. At the same time, credit institutions also reduce expenses as part of the effort to reduce interest rate, and support enterprises in accordance with the instructions of the Prime Minister and the SBV. At present, the average interest rate for priority fields is as follow: short term 6-6.5% per year, mid and long term 8 – 10.5% per year; for production and business, at 6.8 – 9% per year for short term; 9.3 – 11% per year for mid and long term. 

According to experts, determination and effort of related administrative agencies in managing monetary policies and instruments flexibly have brought success to the process of monetary policies management from the beginning of the year until present. This is the solid foundation for banking system to fulfill its objectives of supporting the economic growth, controlling inflation rate and stabilizing macro economy to fulfill the government’s economic targets for 2017. 
Nguyen Tung
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