The Vietnamese Government is gradually loosening the fiscal and monetary
policies in a bid to tackle the economic downturn, but the move has yet to give
any positive sign to the economy, and experts say such a change might bring no
help.
Regarding the monetary policy,
Phan Thi Thanh Binh, co-head of ANZ Bank’s global markets, observed the State
Bank of Vietnam (SBV) had taken many measures to support the economy.
SBV has lately allowed several
banks to have credit growths exceeding the maximum target of 17%. In addition,
the central bank has given the nod to debt payment extension and debt
restructuring, she said.
Furthermore, SBV sets a credit
growth target of 8-10% for the second half of the year, after credits only
inched up 1.06% in the first half, a record low in as many years.
The SBV governor has recently
signaled that the deposit rate cap might be reduced to below 8% if CPI fell to
under 7%. In the first six months, the key policy rates were slashed by five
percentage points.
“Such interest rate cuts are
rapid and strong, and beyond expectations of many people,” Binh told the media
on Wednesday.
“Those moves suggest that the
central bank is loosening the monetary policy,” she added.
Moreover, the fiscal policy also
shows signs of easing after the Government announced to advance 30 trillion
dong from the 2013 State budget spending for public investment in 2012.
Additionally, some 21 trillion dong will be pumped into the economy every month
in the rest of the year under the fiscal plan.
Such moves, according to Binh,
are aimed to support the economy currently struggling with choked off credits,
rising bad debts, mounting inventories and high rate of business bankruptcy.
When asked in which way the
aforesaid measures would affect inflation next year, Binh quoted the central
bank governor as saying that the Government would tighten the monetary policy
in this year’s fourth quarter to prevent high inflation from coming back in
2013.
Such a standpoint can be seen as
policy hiccups.
Meanwhile, economic expert Le
Dang Doanh stated now is not the right time to stimulate the economy.
“Loosening monetary and fiscal
policies now may fuel inflation later,” he stressed.
Doanh said the economic operators
should learn from experience of the past five years, when the country was stuck
in a vicious circle of curbing inflation and tacking downturn.
Furthermore, loosening these two
policies might foster the greed of many investors and enterprises with plans to
do business recklessly.
“The most important thing is to
restructure the economy to create a foundation for efficient economic
activities,” Doanh underscored.
Sharing this view, Binh said the
economic restructuring programs must be deployed in a proper way to gain
investors’ confidence in sustainable growths in the long term.
“But the point is the economic
restructuring programs announced recently show no major breakthrough. Even the
State-owned enterprise restructuring program does not include any new point. We
haven’t seen the quality in such programs,” she remarked.
Saigon Times
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