Vietnam credit growth should be 15 pct in 2012-PM

by lexie Mon Dec 19, 2011 11:05 am

December 19, 2011

Vietnam credit growth should be 15 pct in 2012-PM

Vietnam should aim for credit growth in the banking sector of 15 percent next year, Prime Minister Nguyen Tan Dung said in a Monday report, in a sign interest rates may soften in 2012.

This year, credit will have grown about 12 percent over 2010, well below an annual target of keeping expansion under 20 percent, while the money supply has risen an estimated 10 percent, also below the year's target of 15-16 percent, the central bank has said.

The 15 percent growth target for 2012 should replace a targeted range of 15 to 17 percent to accommodate an inflation rate of 9 percent, Dung was quoted as saying by state-owned Voice of Vietnam radio.

It was the first comment on a specific inflation target for next year since parliament approved a government target for 2012 inflation of below 10 percent, a slowdown from a rate of nearly 20 percent expected this year.

At a central bank meeting with bankers on Saturday, Dung asked that the central bank maintain "flexible and suitable management of monetary policy instruments in order to gradually reduce interest rates in line with the slowing pace of inflation", the government said in a statement.

Even though several state-owned banks have cut interest rates on dong loans in recent weeks to around 14-15 percent, most banks still charge 17-20 percent, which business executives have said has severely hit operations since 2010.

The money supply next year is targeted to grow 14-16 percent from 2011, the State Bank of Vietnam said in a statement.

Vietnam's economy, which has been struggling with Asia's highest inflation, is beginning to stabilise but the fight is not over and it needs to do more to address weaknesses in the financial sector, the International Monetary Fund (IMF) said this month.

Vietnam's inflation rate in 2012 would slow to 11 percent from 18.7 percent this year, the Asian Development Bank said. Inflation forecasts for 2012 by the IMF and the World Bank also point to a two-digit rate, of between 10.5 and 12.1 percent. (Reuters)
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