The State Bank of Viet Nam (SBV) will effect further interest rate cuts soon, Governor Nguyen Van Binh has said at a conference held to discuss monetary measures needed to boost socio-economic development in Ho Chi Minh City.

The SBV’s main policy this year is to concentrate on accurately restructuring debts, ensuring enough provisions and properly using reserves to handle credit risks.

He said the bank will also strongly punish credit institutions that do not meet reserve requirements but give out dividends.

“Inflation is lower now than at the same time last year, but it can rise again if we do not have effective measures to control it.”

“This year, the GDP is likely to be higher than last year’s figure. So, if we can keep inflation under 7 percent the deposit interest rate can be reduced to 7 percent per year and the lending interest rate will stand at around 10 percent.”

To Duy Lam, director of the SBV Branch in Ho Chi Minh City, told the conference that the city’s monetary market had been stable in the first three months of the year with interest rates down by between 1.5 and 2 percent per year over late last year.

“Local banks have applied the lending interest rate of 12 percent and now 11 percent to five prioritised sectors. They have also launched several special preferential credit packages with interest rates of 8 or 9 percent per year.”

Local banks also actively restructured debts so outstanding loans with the interest rates of less 15 percent per year now account for 83 or 85 percent their loan portfolio, he said.

In addition, the city government has implemented many programmes that aim to connect banks with enterprises, thus helping businesses overcome financial difficulties and banks improve their credit growth.

Governor Binh noted that Ho Chi Minh City has achieved several growth rates that are much higher than national rates.

Many delegates at the conference said local enterprises still found it difficult to access bank loans. They wanted the central bank to allow more enterprises find low cost capital to run their business.

Binh said that the central bank was trying to establish a proper lending interest rate that is appropriate to inflation so as to ensure macroeconomic stability.-VNA