Difficult to reduce lending rates

In the context of Vietnam's economy facing many difficulties in 2016, the monetary management policy of the State Bank has achieved certain successes. However, according to economic experts, lending interest rates are still high. "The common lending interest rate of 6-9% is high compared to the capacity of enterprises. In 2016, interest rates were still not reduced as desired by enterprises," said Dr. Nguyen Tri Hieu.

According to banking expert Nguyen Tri Hieu, the increase in the value of the Vietnamese Dong compared to the USD and other currencies will be disadvantageous to the export activities of enterprises. For example, the Chinese Yuan has increased by 5-6% compared to the beginning of the year. The devaluation and continued devaluation of the Chinese Yuan will affect Vietnam because the prices of Vietnamese goods will become more expensive compared to other currencies.

Transaction at the bank. Illustration photo

From the beginning of the year, in response to the Government's policy, the State Bank of Vietnam has set a target of reducing lending interest rates to ease difficulties for businesses. However, lending interest rates are still high for business operations as well as profit margins of businesses.

In particular, in October 2016, four major state-owned banks reduced their deposit interest rates, and then a number of commercial banks also reduced their deposit interest rates by 0.1 - 0.2%. This move made many people expect that this was the right time to reduce lending interest rates, but so far the lending interest rates have not decreased much.

Dr. Nguyen Anh Tu, Deputy Director of the Monetary Policy Department - State Bank of Vietnam, said: Currently, lending interest rates fluctuate between 6-9%, but good customers can borrow at interest rates lower than 6%. "In the trend of a better economy, interest rates can stabilize or even decrease," said a representative of the State Bank of Vietnam.

Regarding exchange rate management, Mr. Tu added: The adjustment of the monetary policy of the State Bank with the central exchange rate has been successful. Previously, many countries used the central exchange rate as the closing exchange rate of the interbank market, but this exchange rate did not fully reflect the market and was easily affected. "Thus, it can be said that by the end of the year, the exchange rate was almost stable, the central exchange rate policy was quite successful in implementing anti-dollarization, signs of foreign currency speculation have decreased significantly. Anti-dollarization also helps improve the effectiveness of monetary policy, because in a dollarized economy, the effect of monetary policy is greatly reduced. In addition, increasing foreign exchange reserves has a great effect in reducing borrowing costs in the international market, Mr. Anh Tu said.

Many bank leaders believe that if the bad debt problem is not completely resolved, lending interest rates will be difficult to reduce in the short term. In addition, small and medium enterprises still have difficulty meeting the necessary conditions of commercial banks to limit bad debt of banks.

SSI Securities Corporation representative analyzed: Inflation is currently at 5%. Meanwhile, inflation in 2017 is forecast to increase due to pressure to increase medical service prices. The sharp increase in the consumer price index (CPI) causes businesses to transfer costs to consumers, so inflationary pressure in 2017 is higher than in 2016, so interest rate pressure is difficult to reduce.

According to Minh Phuong/baotintuc