Interest rate may fall to 8pct/yr by end of the year: governor

If economic growth is stable and inflation remains under control, the deposit interest rate by the middle of 2013 may be at 7%/year and the lending rate would be about 10%/year, the State Bank of Vietnam (SBV)’s governor, Nguyen Van Binh, said at the meeting with enterprises in HCM City on July 28.

At the meeting, interest rates continued to be a main topic. The lending interest rate is only 10%/year is a specific requirement arisen from enterprises.

Answering this request, the governor Nguyen Van Binh said that lowering interest rates is a process. If from August 2011, the target was set to reduce the lending interest rate to 17-19%/year, till now the lending interest rate of 15%/year is still considered high level.

The governor expected, if the inflation rate this year is controlled at about 7%, the deposit interest rate in dong can be further reduced to 8%/year. And if economic growth is stable and inflation remains under control, by the middle of 2013, the saving interest rate is likely to be 7%/year and the lending interest rate will stay at about 10%/year.

In the first seven months of this year, inflation rose only 2.22%. In the remaining five months, inflation will be likely to be controlled at 7 percent and the interest rates can be further reduced. With showing trend of inflation, some international institutions have also predicted that Vietnam will further reduce interest rates from now till the end of this year.

With the information at the meeting on July 28, the governor Nguyen Van Binh also said that maybe the interest rates will experience another reduction within this year.

On the sidelines of the meeting, Truong Van Phuoc, general director of Vietnam Export Import Commercial Joint Stock Bank (Eximbank-EIB), said that the important thing now is to help enterprises consume inventories via certain demand stimulus measures, in additional to reducing the interest rates. Inventories are considered one of burdens causing bad debts at many enterprises currently.

Phuoc also said that from now till the end of this year, the interest rate of 12 percent per year is the “floor” level of the lending interest rate in general that banks can realise.

 

Category: Finance