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Central bank to pursue loose policy in 2009
Vietnam’s central bank will continue with its loose monetary policy into 2009 to combat an economic slowdown driven by the global financial crisis, according to State Bank of Vietnam Governor Nguyen Van Giau.
“Loosening monetary policy is one of the key measures” for maintaining economic growth next year, Giau told reporters Wednesday at a meeting in Hanoi. The bank cut its key interest rate to 10 percent on December 2, the fourth reduction in six weeks.
The International Monetary Fund has said that Vietnam’s economy may expand 5 percent next year, the slowest pace in a decade. The government targets growth of 6.5 percent in 2009, down from this year’s 6.7 percent and 8.5 percent in 2007.
Prime Minister Nguyen Tan Dung told ministries and provinces to step up “urgent measures” to cope with declines in production and exports, according to a statement earlier this week on the government’s website. “The global economic turmoil will be unpredictable,” Dung said.
“The central bank will also continue to constrain credit growth in lenders next year,” Giau said. “Lending growth should be limited to a maximum of three and a half times the rate of economic growth in 2009,” he said.
But credit expansion would face huge challenges as corporate borrowers receiving less orders may not want to take more bank loans, economist Prakriti Sofat at HSBC in Singapore said.
Bloomberg, Reuters
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