2:26:59 PM | 10/3/2008
Vietnam’s macro economy is being threatened by three “detonators” that need defusing, said Le Xuan Nghia, head of the central bank’s Banking Development Strategy.
The detonators include the ballooned property market, big trade deficits and high inflation, Nghia said at the forum on public company governance March 6.
First, the real estate market is bubble, while all commercial banks offer loans to property investors and even use property as mortgages. Once the property market is collapsed, the banking system will follow.
Second, Vietnam’s trade deficits have reached 10 per cent of GDP, which is balanced by short-term capital sources from other countries. If these sources are withdrawn from Vietnam, the economy will suffer crisis, like the lesson from Thailand in 2007.
Third, inflation is fast rising. If Vietnam does not tackle the problem quickly, people will lost their confidence in the financial system.
However, Nghia said, the State Bank of Vietnam has been preparing measures to defuse the detonators.
The central bank will increase compulsory reserves at commercial banks, continue to force banks to buy bills but slow down time for the bill issuance, improve quality of open market, and buying foreign currencies and expand forex trading band.
In addition, commercial banks will be allowed to continue lending property sector, but with selective projects, the official said.
The central bank is also mulling suitable measures to improve stock investors sentiment in order to recover the current grey stock market, he said. (Labor)
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