In a recent press interview, Governor Nguyen Van Giau of the State Bank of Vietnam (SBV) asserted that in the final months of 2010, the SBV will continue to manage the monetary policy in a prudent and flexible manner in accordance with the Government’s early-year directives of stabilizing macro-economy, preventing high inflation and ensuring economic growth. Following is the full text of the interview:
Question: Rumor has been spread that credit growth in September 2010 changed remarkably. Can you make comments on this rumor?
Answer: In 29 days of September, the credit outstanding increased by only 2.48% (not by 4.5%). It is a normal situation. If the credit outstanding had had increased by 4.5% in September, it could have caused remarkably negative impact on macro-economy. As clearly stipulated in Resolution No.18/NQ – CP, this year we should make efforts to stabilize macro-economy, prevent high inflation and ensure economic growth rate of 6.5%. Accordingly, all ministries and agencies should treat such objective as a top priority. Therefore, a few remarks on possible shortage of capital resources and difficult access to loans are completely groundless.
Question: Is there a significant difference between the ratio of credit growth in USD and VND?
Answer: The proportion of foreign currency credit in 2010 has varied somewhat from the previous years, but far from abnormal. In the previous years, the lending demand was less than the amount of mobilizing amount of foreign currencies, so commercial banks had to make overseas deposits. However, the borrowing demand of foreign currencies is higher this year, so is foreign currency credit. It is a normal development. There have been comments and forecasts that foreign currency situation might be tense, especially in the end of 2010. However, in my opinion, the satisfactory management of the Government and close coordination among ministries and agencies are of paramount importance. I believe that the market will give the best answer to the aforesaid concern.
Question: What measures does SBV take to balance USD and VND credit demand?
Answer: According to commercial banks’ reports, the proportions of USD and VND credit amounts have been carefully calculated and strictly managed. For example, for clients as corporate exporters, banks take the initiative to ensure that the borrowers will repay their loans from the foreign exchange revenue. For corporate importers, commercial banks should take proper measures to ensure that the borrowers will repay their loans in compliance with the signed credit contracts. Furthermore, as far as I know, many banks have hired consultants to appraise credit contracts and enhance the capacity of risk management.
Question: The Vietnam Banks Association (VNBA) has called upon banks to reach consensus on lowering the mobilizing interest rate to 11% p.a. What is your opinion?
Answer: I congratulated VNBA on making such a call for consensus. It shows that the VNBA plays an increasingly important role via-a-vis its members. Credit institutions have considered the VNBA as an organization that effectively protects the legitimate rights and interests of the members. Therefore, it is necessary to appreciate the role of professional associations. I respect the remarks and the issues which VNBA have been raising. In recent years, what VNBA have done is thoroughly considered, since VNBA has carefully surveyed the market and held intensive discussions before making this call for consensus.
In the meantime, SBV will continue to use monetary policy management tools to support commercial banks with possible reduction of interest rates dependent on economic developments.
Question: Rumor has been spread that credit growth in September 2010 changed remarkably. Can you make comments on this rumor?
Answer: In 29 days of September, the credit outstanding increased by only 2.48% (not by 4.5%). It is a normal situation. If the credit outstanding had had increased by 4.5% in September, it could have caused remarkably negative impact on macro-economy. As clearly stipulated in Resolution No.18/NQ – CP, this year we should make efforts to stabilize macro-economy, prevent high inflation and ensure economic growth rate of 6.5%. Accordingly, all ministries and agencies should treat such objective as a top priority. Therefore, a few remarks on possible shortage of capital resources and difficult access to loans are completely groundless.
Question: Is there a significant difference between the ratio of credit growth in USD and VND?
Answer: The proportion of foreign currency credit in 2010 has varied somewhat from the previous years, but far from abnormal. In the previous years, the lending demand was less than the amount of mobilizing amount of foreign currencies, so commercial banks had to make overseas deposits. However, the borrowing demand of foreign currencies is higher this year, so is foreign currency credit. It is a normal development. There have been comments and forecasts that foreign currency situation might be tense, especially in the end of 2010. However, in my opinion, the satisfactory management of the Government and close coordination among ministries and agencies are of paramount importance. I believe that the market will give the best answer to the aforesaid concern.
Question: What measures does SBV take to balance USD and VND credit demand?
Answer: According to commercial banks’ reports, the proportions of USD and VND credit amounts have been carefully calculated and strictly managed. For example, for clients as corporate exporters, banks take the initiative to ensure that the borrowers will repay their loans from the foreign exchange revenue. For corporate importers, commercial banks should take proper measures to ensure that the borrowers will repay their loans in compliance with the signed credit contracts. Furthermore, as far as I know, many banks have hired consultants to appraise credit contracts and enhance the capacity of risk management.
Question: The Vietnam Banks Association (VNBA) has called upon banks to reach consensus on lowering the mobilizing interest rate to 11% p.a. What is your opinion?
Answer: I congratulated VNBA on making such a call for consensus. It shows that the VNBA plays an increasingly important role via-a-vis its members. Credit institutions have considered the VNBA as an organization that effectively protects the legitimate rights and interests of the members. Therefore, it is necessary to appreciate the role of professional associations. I respect the remarks and the issues which VNBA have been raising. In recent years, what VNBA have done is thoroughly considered, since VNBA has carefully surveyed the market and held intensive discussions before making this call for consensus.
In the meantime, SBV will continue to use monetary policy management tools to support commercial banks with possible reduction of interest rates dependent on economic developments.
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