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Monetary policy largely affects 2011 inflation: SBV governor
Nguyen Van Binh, the Governor of the State Bank of Vietnam, has admitted that Vietnam has a high inflation rate of 18.75 percent last year, of which two thirds were the result of the implementation of the monetary and fiscal policy.
The statement was made by Binh during an online meeting with people via the government portal on January 12.
Binh said that the Vietnamese economy has a high level of opening and the country’s price management was poor for such products as food and foodstuff, which account for most of Vietnam’s consumer price index (CPI).
According to Binh, in 2011, the banking system exerted great effort to keep the credit growth at a low of 13.1 percent helping maintain economic growth at 6 percent.
Vietnam maintained the stability of foreign currency exchange rates, which fluctuated less than one percent from March to December last year, and made the local currency (VND) more attractive.
The Bank Governor also frankly analysed the weakness of the banking system’s liquidity. He held that banks’ capital has been used in a disproportionate way – short-term loans have been used for medium or long term applications. Binh cited the fact that some credit organizations had used 60-70 or even 100 percent of their capital as medium- or long-term loans, while the State Bank of Vietnam stipulates that short-term loans make up only 30 percent of a bank’s capital.
Therefore, Binh concluded, it is difficult to reduce loan interest at the moment. But the State Bank will try within its capacity.
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