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Strong effort needed to reach nation's credit growth target
Lending by the banking sector must grow by 1.25 per cent per month for the rest of the year if the country hopes to meet its full-year target of 12 per cent, according to a National Financial Supervisory Committee report.
"It is a difficult task," said committee chairman Vu Viet Ngoan, pointing out that enterprises' capacity to absorb capital remained limited, the real estate market was still troubled and the economy's aggregate demand continued to be weak.
Dao Van Hung, director of the Academy of Policy and Development, said that interest rates were what they had been in 2005-07, which was an appropriate level for the current economic situation. However, it would take time for the economy and enterprises to absorb capital.
"The lending market will take at least four to six more months to recover," Hung said, adding that any hurry might cause negative impacts.
According to economic expert Vu Dinh Ang, lowering interest rates was not "the cure to all diseases" of enterprises.
"Lowering interest rates does not mean credit growth," said Le Xuan Nghia, a member of the National Financial and Monetary Policy Advisory Council.
Despite the interest rate cuts, enterprises still seemed reluctant to borrow capital, according to Cao Sy Kiem, president of the Viet Nam Association of Small and Medium Enterprises.
To achieve the credit growth target, it was important to accelerate aggregate demand and purchasing power, clear inventories and resolve bad debts, all of which required determination from the Government, he said, adding that enterprises also needed to hasten their restructuring.
As of May 22, total lending by the whole banking system increased by 2.3 per cent over the end of last year, according to the State Bank of Viet Nam
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