Vietnam to Cap Credit Growth at 20%

The Governor of the State Bank of Vietnam has been given a nod from the Prime Minister to cap credit growth at 20 per cent, even 18 - 19 %, in 2011.

 

Governor Nguyen Van Giau said the new policy will help reduce the trade deficit and produce positive effects on foreign exchange market and exchange rate policies.

 

New measures will cut money supply by some VND100 trillion and help cut the trade deficit by US$3 - 4 billion, thus easing pressures on exchange rates, Giau said to the press.

 

Mr Giau said the Prime Minister had concluded four fiscal measures to reduce aggregate demand. The first is to increase State budget revenue. The second is to limit budget deficit at 5 % of GDP, lower than the target proposed by the National Assembly. The third is to review and reshuffle investment projects in 2011 to stop ineffective ones. The fourth is to cut regular expenditure by 10 %.

 

According to the Governor, if the credit growth is capped at below 20 % (compared to 23 % as planned), as much as VND50 trillion will be reduced. Together with these four fiscal measures, spending will be cut another VND60 trillion and the money supply will be reduced by over VND100 trillion.