Vietnam lowered credit growth target to 15-17 percent from previous 20 percent and money supply (M2) to 12 percent from 16 percent as the country is facing highest inflation in Asia, minister, Chair of government Office said at a press conference on September 26.
This move came out as 9-month economic conditions proved that inflation target of 18 percent and GDP growth rate of 6 percent are to be achieved provided that the government continues to tighten monetary policies and to reduce public debts from their current too high level.
To effectively deploy the plan, the government ordered relevant bodies to take actions to ensure liquidity in the banking system, to oversee commercial banks’ credit activities especially bad debts, to closely manage real estate loans, foreign currency exchanges and gold trading.
Public investments should be further reduced and only the most prioritised projects shall be funded to boost completion, Dam said, adding that total investments surpassing savings coupling with loose monetary policies are being blamed for high inflation.
Vietnam inflation stands on top in Asia
Consumer price index in Vietnam mounted 22.42 percent in September, still maintaining its top spot in inflation figures for the whole region even after easing from 23.02 percent in August, the GSO data showed.
Vietnam regulators have been trying different measures to tame inflation this year. prime minister Nguyen Tan Dung in February cut the credit growth target to below 20 percent from 23 percent and M2 target to 15- 16 percent from 24 percent.
The central bank also raised key rates in 9 times to current 14 percent from 7 percent in last November to limit lending growth.
Given these actions, the Asian Development Bank forecast Vietnam’s inflation to hit 18.7 percent this year, the Economist Intelligence Unit expected the country’s inflation to average at 18.9 percent.