|
State Bank gets go-ahead to cut prime rate again
The Government has allowed the State Bank of Vietnam to again cut its prime interest rate – from 11 to 10 percent.
The decision, posted on the Government website via official letter No 8260/VPCP-KTTH on Dec. 2, is effective from Dec. 5.
It will be the central bank’s fourth rate cut since Oct 20.
It is part of an effort to make credit cheaper for enterprises so as to bolster the slowing economy and dampen the impact of the global financial crisis.
Importantly, the decision allows lenders and borrowers to negotiate the interest rates for projects thought well planned with State Bank of Vietnam Governor Nguyen Van Giau ultimately responsible for the outcome.
“It’s a really good move,” said the Central Institute for Economic Management’s Trade Policy Department director Vo Tri Thanh.
“Lending rates should follow the signals from the real market”.
But the Government’s official letter does not remove the lending rate cap which may mean the negotiations will be limited.
The cap pegs the rate at no higher than one and a half times the prime rate and this may mean that the maximum interest lenders can charge will be 15 percent against the previous 16.5 percent.
Neither the central bank governor nor his strategy and monetary policy directors were immediately available to check the possibility of the lending rate cap’s removal.
The central bank has also been allowed to lower the refinancing and the overnight rate for electronic payments to 11 percent from 12 percent and the discount rate to 9 from 10 percent.
The Government also lowered – by a substantial two percentage points – the compulsory reserves banks must hold, and instructed the central bank governor to decide rate cuts for each type of financial institutions.
The interest rate for the compulsory reserve was trimmed from a yearly 10 to 9 percent.
VNA
|
