The State Bank of Vietnam, the country’s central bank, has received permission from the prime minister to further cut the benchmark interest rate to 10 per cent from December 5 as part of efforts to push down borrowing costs to boost domestic production.
This is the fourth time the SBV will have cut the benchmark interest rates over the past two months.
The SBV will cut refinancing and overnight lending rates to 11 per cent from current 12 per cent, discount rates to 9 per cent from 10 per cent, reduce interest rates of dong deposits for compulsory reserves to 9 per cent from 10 per cent, axe by 2 per cent of compulsory reserves for dong and dollar deposits for credit institutions and banks.
The central bank will also allow credit institutions to lend money to effective goods producers and project developers, based on negotiations.
“It is a really good move,” Vo Tri Thanh, a lead economist and head of the Central Institute for Economic Management’s Trade Policy Department said.
“Lending rates should follow the signals from the real market,” Thanh highlighted.
With the move, the SBV will push down borrowing costs to 15 per cent from current 16 per cent per annum.
A number of big state-owned banks including the Agricultural and Rural Development Bank (Agribank), the Bank for Investment and Development of Vietnam (BIDV), the Bank for Foreign Trade of Vietnam (Vietcombank), and the Lien Viet Bank (Lienvietbank) jointed efforts to cut lending rates to 11 per cent to 11.4 per cent from current 12 per cent to 14.5 per cent, state media said.
Late last week, Deutsche Bank AG predicted that Vietnam will cut 400 points of the benchmark interest rates to maintain the growth amid worsening global economy. (Vietnam Economic Times, News)
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