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Economist argues interest rates should be eased further
Dr. Tran Hoang Ngan, a renowned economist, believes that a lending interest rate of 12-13 percent would be the most reasonable.
Dr. Tran Hoang Ngan, Deputy President of HCM City Economics University and a member of the National Advisory Committee for Finance and Monetary Policies gave a recent interview to Dau tu chung khoan. He asserted that the current negotiable interest rates are affordable for businesses, but interest rates of 12-13 percent would be best. Regarding deposit interest rates, the economist proposed that the current 10 percent per annum rate is now “real positive”, which means that depositors can make real profits on their deposits.
Dau tu chung khoan: What do you think about deposit interest rate tendencies in the upcoming months?
Tran Hoang Ngan: If the consumer price index (CPI) in May is curbed, this would be a good opportunity for the State Bank of Vietnam to loosen the monetary policy and give capital support to commercial banks. This means that commercial banks will be able to reduce deposit and lending interest rates.
Dau tu chung khoan: The average CPI for the last four months of 2010 increased by 8.69 percent in comparison with the same period of 2009. Do you think it is possible to curb inflation at the target of under 10 percent?
Ngan: The CPI increased very slightly in April, by just 0.14 percent over the previous month, which is the lowest increase since March 2009. This is a good sign.
In the world, crude oil prices are decreasing due to bad news about the crisis in some European countries and discouraging information from the US. If the crude oil price keeps decreasing in the world market, thus leading to petroleum price decreases in the domestic market, Vietnam could force prices down. If so, the goal of curbing the inflation rate at below 10 percent will be within reach.
Dau tu chung khoan: Is the current lending interest rate affordable for businesses? Do you think that we need to ease lending interest rates further?
Ngan: The current interest rate of 14 percent per annum, I think, is reasonable for businesses. I think that it would be better for businesses, however, if the interest rate dropped to 12-13 percent. As for the deposit interest rate, the current rate of 10 percent is now “real positive”.
Dau tu chung khoan: The total outstanding loans in the first four months of 2010 increased by only 5.58 percent. Do you think that the outstanding loans growth rate is too low if compared with the yearly plan?
Ngan: The credit growth rate in 2009 was relatively high at 38 percent. Therefore, I think that a 5.58 percent credit growth rate in the first four months of the year was reasonable. As you may know, the world’s economy has not fully recovered, so Vietnamese businesses still do not have stable export markets and thus the demand for capital has not increased yet.
I think that the target of curbing the credit growth rate at 25 percent in 2010 is reasonable.
vietnamnet, DTCK
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