Illustrative image (Source: vietstock.vn)
Hanoi (VNA) – Credit this year could reach roughly 18 percent, meeting the capital demands of the economy, Deputy Director of the State Bank of Vietnam's Monetary Policy Department Nguyen Duc Long said.

Long noted that the rise in credit was an indication of positive economic growth and improved consumption in the domestic market.

Further, according to Long, the increase in credit was seen in the beginning of the year and continuing every month, instead of only during a few months at year-end, as seen last year.

Statistics from the central bank showed that lending rose 14.5-15 percent in the first 11 months. Also, the SBV reported that credit growth this year has been fundamentally fulfilled.

The increases in banking capital this year has halved, though the economic growth rate has been maintained. The credit flow contributed to spurring the nation's GDP growth rate to 6.5 percent this year.

From 2006-10, credit growth surged 30 percent, but GDP fluctuated at only 7 percent.

This year's capital flow has served production and ensured practical and sustainable economic growth, instead of being directed to vulnerable and bubble sectors, such as real estate and securities, as in the past.

However, experts said that although the average lending rate this year has been cut by roughly 0.3-0.5 percent against last year, it should be further reduced to cut costs for domestic businesses.

Of note, economist Le Dang Doanh said that the interest rate gap between loans and deposits was too large, benefiting banks but causing difficulties for enterprises.

Doanh said while inflation remained low at only 1 percent, and deposit rate averages were 5 percent per year, many businesses still have to borrow at rates of 11 percent per year. Meanwhile, the rate for borrowing in Thailand and China are only 3 percent and 4 percent, respectively.

Many banks have also launched preferential credit packages with low interest rates of 7-8 percent per year, but they have not been easy to access, such as soft loans. Banks also acknowledged that only a few enterprises could qualify for these loans.-VNA