The State Bank of Vietnam has adjusted its benchmark interest rates five times in 2012 at a pace faster than planned, bringing the ceiling for deposit interest rate down to 8 percent a year and lending interest rate for priority sectors to 12 percent per annum, the bank said at a press conference on Dec. 27.

The central bank’s Governor Nguyen Van Binh affirmed that these moves have helped reduce borrowing costs for businesses and improve their access to capital supply.

Thanks to drastic and consistent monetary measures, most indicators registered suitable growth rates. Total payment means for the year increased by 20 percent while credit growth was about 7 percent, contributing to stabilising macro-economy, keeping inflation at a low 6.81 percent and achieving an economic growth of 5.03 percent.

It is noteworthy that credit expansion, though at a low rate, has shifted towards a more suitable structure, in line with the Government’s policy. By December 20, total lending increased by 6.45 percent compared to the level at the end of 2011. Loans in Vietnamese dong increased by 8.92 percent, while those in foreign currencies dropped by 3.51 percent. Lending for export, agriculture and rural development showed a higher increase than the overall rate, while total debts in non-prioritised sectors decreased from the previous year.

The governor said the central bank will continue keeping a close watch of credit growth to ensure safety and efficiency. Priority will continue to be given to production and business activities, particularly those in the five priority groups of agriculture-rural development, export, support industry, small- and medium-sized enterprises, and hi-tech enterprises.

Whether to further reduce interest rates or not will depend on many factors, Binh said, stressing that more interest cut is only possible when inflation is put under control.

According to the Director of the State Bank’s Foreign Exchange Management Department, Nguyen Quang Huy, the stable foreign exchange rate and market have allowed businesses to make long-term production and business plans, while discouraged people from keeping foreign currency. The banks also reported a shift from deposits in foreign currencies to deposits in Vietnamese dong throughout the year.

The year 2012 has seen a record surplus in payment balance, and the payment balance surplus is forecast to continue into 2013, though at a lower level, about 3 billion USD. The State Bank affirmed it will continue with the tight and flexible management of the foreign exchange market with a view to increasing the competitiveness of domestic goods, encouraging export, reducing trade deficit, further improving the country’s international payment balance and national foreign currency reserves, thus promoting sustainable development.-VNA