Vietnam central bank urged to stimulate cash flow
Vietnam central bank urged to stimulate cash flow
The State Bank of Vietnam (SBV), the country's central bank is asked to gradually cut interest rates, handle bad debts, help enterprises reduce inventories and boost aggregate demand, in order to generate a smooth flow of money and goods in the economy.
At the regular meeting of the Government on Sunday, Deputy Prime Minister Vu Van Ninh requested the central bank to promptly remove the difficulties of businesses in capital access.
Echoing this view, members of the Government stressed it is necessary to reduce bad debts in sync with restructuring the incompetent banks, and reasonably roll out the fiscal policy in close coordination with the monetary and credit ones.
As such, SBV needs to adopt drastic measures to deal with bad debts, especially the inter-bank ones. In addition, the central bank should consider extending debt repayment for enterprises with great business potentials but temporarily in trouble, in a bid to stimulate cash flow in the economy.
SBV is also asked to gradually pull down interest rates in accordance with the decrease of inflation. In the first five months of the year, deposit rates were slashed 2-3 percentage points against 2011, while lending rates were lowered by 1-4 percentage points.
Overall, the socio-economic situation in 2012 Jan-May period has seen positive changes and key sectors are on the road to recovery. Inflation is under control, macro-economy is stabilizing, and production and service are on the rise, albeit slow, says the Government web portal chinhphu.vn.
Consumer price index (CPI) has continuously slowed down since March. Compared to December last year, May CPI only rises 2.78%, the lowest level in the last three years.
In the first five months, Vietnam exported some US$42.86 billion worth of products, surging 24.1% year-on-year. The import turnover is estimated at US$43.48 billion, up 6.6%.
Trade deficit has eased to a mere US$622 million, or 1.45% of the total export turnover, much lower than the same periods in many years, which leaves a positive effect on the country’s forex balance and reserves.
However, certain problems have emerged, notably the poor economic growth. The index of industrial production only inched up 4.2% year-on-year.
Interest rates were cut but still at high, making it difficult for corporate borrowers. The number of businesses that dissolved or suspended their operation in the first five months increased sharply, according to the Government meeting.
The State budget revenue in five months only met 39.3% of the year’s estimate, quite low compared to the same period last year.
The total investment from the State budget and the Government bonds for 2012 is targeted at over 240 trillion dong for 2012, but only 66 trillion dong was disbursed in the five months of the year, versus 73 trillion dong in the year-ago period, says a report on Vnexpress.
“The remaining public investment capital is abundant,” said Vu Duc Dam, minister and chairman of the Government Office. The point is public capital must be invested in the right place, at the right time, with efficiency being the major focus, said the minister.
The SaiGon times
