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Seeking reasonable interest rates to sell bonds
Experts have said that the main reason that recent Government bond bids were unsuccessful was unattractive interest rates. Some say that the interest rates have become distorted due to the Government’s interest rate subsidy policy.
National Assembly deputies talked about the solutions they suggested to improve the sales of Government bonds.
Minister of Finance Vu Van Ninh: We do not mobilise capital at any cost
There are many reasons Government bond issuances have gone slowly, including the interest rates.
However, I have to say that we have to consider how we will use capital to decide how much capital to mobilise. We mobilise capital when we need.
Since the beginning of the year, Vietnam has been mobilising capital from many sources, therefore, we plan to mobilise capital from bonds at a reasonable level to avoid misspending. However, when we need capital in a big volume, we have to apply many measures to strengthen the capital mobilisation.
The Government wants to mobilise capital at reasonable interest rates. Especially, when we need to stimulate demand, we need low interest rate capital.
Commercial banks recently have raised deposit interest rates because they are having difficulties getting capital. We also have to consider market interest rates to define reasonable Government bonds. The bond interest rates can be used in capital mobilisation and also be used as a benchmark for the market.
As such, what I want to say is that we have to consider both the capital demand and the market conditions to define reasonable interest rates for bonds, while we do not mobilise capital through bond issuances at any cost.
Dr. Tran Du Lich, former head of the HCM City Economics Institute: Interest rates have become distorted
Medium- and long-term bonds are having difficulty finding buyers simply because of the low interest rates.
The interest rates on the market have been distorted due to the Government’s interest rate subsidy policy. I think that not until the Government completely removes the interest rate subsidy will we have actual market interest rates.
I think that it is necessary to apply a ‘soft’ mechanism in Government bond mobilisation.
Phung Quoc Hien, Chairman of the National Assembly’s Finance-Budget Committee: It is necessary to set bond interest rates by considering other kinds of interest rates
The Government has difficulties if it issues bonds at high interest rates because it has to pay a lot in interest in the future. This is a burden on the state budget.
Another problem will arise that if the bond interest rates are not reasonable, this will affect the interest rates of the credit institution system and commercial lending. Therefore, the Government needs to be very cautious when defining bond interest rates.
The interest rates need to be designed in a way that attracts investors and ensures that the government can pay the interest in the future.
I think that we need to put bond interest rates in harmony with other interest rates, including the interest rates of credit institutions, profitability of shares on the stock market.
VietNamNet, TBKTSG
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