The State Bank of Vietnam (SBV), the country’s central bank, had lowered benchmark interest rate to 7 per cent from current 8.5 per cent effective from February 1 as part of government efforts to support local businesses and avert recession, according to SBV.
The SBV’s move will push down lending rates by banks and credit institutions to 10.5 per cent from 12.75 per cent per annum, the agency said.
Refinancing and rediscount rates were lowered to 8 per cent and 6 per cent from 9.5 per cent and 7.5 per cent, respectively. Overnight inter-bank rate was slashed to 8 per cent from 9.5 per cent.
Interest rate of compulsory deposits in the dong kept at banks and credit institutions was cut to 3.6 per cent from 8.5 per cent per annum.
On the same day, the SBV’s Governor issued a circular on allowing credit institutions to lend on negotiable base, but they must ensure safety rates.
A number of big banks joined the efforts with the SBV in cutting lending rates also.
On February 1, the second biggest state-owned bank-the BIDV-slashed lending rate to 10.5 per cent per annum, rates of 3-month loans to exporters to 8 per cent per annum, of short-term loans to 9 per cent/year, of medium and long-term credits to rates of 12-month credits plus minimal 3 per cent fees.
The Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) will also reduce lending rates of dong credits to 8.5 per cent from 10 per cent per annum.
According to the General Statistics Office, amid the global economic slowdown in January Vietnam’s inflation was up 17.48 per cent on year, trade gap was down sharply at 87.5 per cent on year to US$300 million, and exports and industrial production, the two drivers of Vietnam’s GDP, were down 24.2 per cent and 8.6 per cent on year to US$3.8 billion and US$2.99 billion.
Last year, Communist Vietnam abruptly switched to loosening monetary policies from tightening by cutting five times the prime rate to 8.5 per cent from 14 per cent as part of aggressive steps to prevent economic slowdown.
Credit growth was low at 21 per cent-22 per cent and bad debts by the whole banking system in Vietnam were 3.5 per cent last year.
This year, Vietnam has set a target of GDP growth rate of 6.5 per cent. (VNA)
Vietnamese
