VietNamNet Bridge – Vietnam has been mostly relying on the monetary policies in regulating
the national economy, while the fiscal policy has been ignored.
According to the Governor of the State Bank Nguyen Van
Binh, by the end of May 2013, the outstanding loans had increased very slightly
by 2.98 percent in comparison with the end of 2012. Of this, the dong
outstanding loans had increased by 5.48 percent and foreign currency loans
decreased by 8.41 percent.
As such, the lending interest rates have reduced by
2-4 percent in comparison with the beginning of the year, while the new loans’
interest rates are now equal to the rates applied in 2005-2006 and even lower
than that in 2007. However, despite the sharp falls, the credit growth rate
remains very modest. While commercial banks have continuously launched low-cost
credit packages, businesses still keep silent and don’t intend to borrow money
for the investment.
Bankers have affirmed that they have slashed the
lending interest rates to the lowest possible levels.
Meanwhile, Binh said that the margin between the deposit
and the lending interest rates has decreased to 3.03 percent, and if deducing
the provisions against risks, the gap would be 1,93 percent only, much lower
than the 2.33 percent seen at the end of 2012.
Binh said this was one of the reasons which led to the
sharp falls of the credit institutions’ profits in 2012 and the first months of
2013.
Experts have been pointed out that the monetary policy
has been abused, while the fiscal policy has not been used to stimulate the
national economy. In other words, the monetary and fiscal policies have been
going their separate ways, while they should strive to one thing.
Dr. Le Xuan Nghia, Head of the BDI, a business
development research institute, said he and his colleagues have carried out a
business survey and found out that businesses nowadays only strive to short
term business plans, while they do not think of long term business strategies.
In 2009, when the government launched the interest
rate subsidy package, under which the lending interest rate was lowered to 6.5
percent per annum, a lot of businesses believed that the government would
stabilize the interest rate for a long term. With the confidence, they injected
their money in developing their business and expanding the production.
However, just after some disbursement fits, the
interest rate suddenly soared to 20 percent per annum. A lot of businesses
merely got bankrupt, while their new production lines were left unused, because
they could not bear such the sky high interest rates.
Businesses, which have lost confidence on the interest
rate policy, have decided that they should strive for short term profits only.
A good monetary policy should not only try to increase
the money supply to pave the way for the interest rates to go down. More
importantly, it should strive to a stable monetary policy,” Nghia commented.
Only when the inflation rate, exchange rate and
interest rate are stabilized, will businesses be able to think of their long
term business plans and feel secure to make investment.
“No one can do business well, if the inflation rate
goes up to 15-20 percent and down to 5-6 percent so regularly,” Nghia
maintained.
He has blamed this on the abuse of the monetary policy
in dealing with the problems, while the fiscal policy has been the “outsider.”
Phong Anh
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