The central bank will maintain the current interest rate until the end of the year, provided there is no sudden change in the consumer price index, according to the State Bank’s Monetary Policy Department chief, Nguyen Thi Hong.

In an interview granted to the Vietnam News Agency, Hong noted that the interest rate has now returned to the level of 2005 and 2006, and below half of the level seen in mid-2011. He added that credit institutions might reduce the lending rate by 1-2 percent further still this year if conditions permit.

Asked about concerns over a low credit growth so far this year - which means the goal of 12-14 percent for the year may not be met - Hong said that as a rule, the need for credit usually grows quickly and more strongly in the second half of the year. She affirmed that banks have good liquidity and are working to facilitate businesses’ access to loans by rescheduling outstanding debts and establishing more links with enterprises.

At the same time, the State Bank will pump more refinancing capital to credit programmes for housing, coffee re-planting and dealing with bad debts, according to Hong.

Discussing the latter issue, the SBV official said the bad debt rate of the entire banking system stood at 4.01 percent in April. She added that Circular 09 recently issued by the SBV has created a legal corridor for banks to better classify their bad debts, thus accelerating the process of banking restructuring and dealing with the problem.

She highlighted the positive developments in the monetary market over the recent time, including the downward trend of the interest rate, stable exchange rates and an expanding foreign reserve, which has recently reached a record 35 billion USD.

She added that these achievements prove that the SBV has taken the right track in its monetary policy, contributing to curbing inflation, stabilizing the macro-economy and supporting economic growth.-VNA