Deputy Prime Minister requests consideration of removing interest rate ceiling

Deputy Prime Minister Vuong Dinh Hue, Chairman of the National Financial and Monetary Policy Advisory Council, noted that ministries and branches should consider removing the ceiling on 6-month deposit interest rates, based on recommendations from members of the Advisory Council.

This direction was given by the Deputy Prime Minister at the regular meeting of the third quarter of 2016 of the National Financial and Monetary Policy Advisory Council on the afternoon of September 30.

According to Deputy Minister of Planning and Investment Dao Quang Thu, GDP increased by about 5.93% in the first 9 months of the year, of which the third quarter increased by 6.4%, although lower than the same period in 2015, it increased quite high compared to the second and first quarters of 2016. In particular, agriculture and forestry have started to grow again, reaching 0.65%; manufacturing and processing industry is 11.2%, construction has grown quite well at a rate of 9.1% ...

"According to calculations, economic growth for the whole year of 2016 will reach about 6.3-6.5%, but the high possibility is 6.3%," said Mr. Thu.

Agreeing with the view that GDP will hardly reach the plan, Deputy Governor of the Bank Nguyen Thi Hong said that the growth in the fourth quarter of 2016 must reach 8.3% to achieve the GDP growth of 6.7% for the whole year, while the average in the fourth quarter of previous years was only about 5.6-7%.

Deputy Prime Minister Vuong Dinh Hue proposed removing the ceiling on 6-month deposit interest rates. Photo: Nguyen Hoai

Discussing at the meeting, members of the Joint Advisory Council stated that the GDP growth of 6.1-6.3% for the whole year of 2016 is also a great effort in the context of "tight" fiscal and monetary conditions.

Also according to the State Bank's report at the meeting, by the end of September, the credit growth of the entire system had reached 11%, equal to the growth rate of the same period in 2015; consumer credit by the end of August had increased by 29%. This agency assessed that credit quality had been tightly controlled and credit had been expanded to real estate, medium and long-term loans.

Faced with the trend of strong increase in medium and long-term loans, Deputy Governor Nguyen Thi Hong shared that the agency has reminded commercial banks to proactively balance capital to avoid risks in operations.

The State Bank has also supplied a large amount of money through the foreign currency purchase channel and has not withdrawn money strongly, leaving a relatively abundant liquidity surplus in the system, helping to keep interbank interest rates low. "When credit institutions encounter liquidity difficulties, they can borrow on the interbank market, without having to borrow from market 1 - mobilizing from the population. This has relieved the psychology of hoarding and speculating on foreign currencies and stabilized the mobilization interest rate, reducing the pressure to increase lending interest rates," the Deputy Governor analyzed.

However, from some recommendations of members, Deputy Prime Minister Vuong Dinh Hue noted that ministries and branches should study to remove the ceiling on 6-month mobilization interest rate. In addition, he also requested the State Bank and relevant ministries and branches to review priority credit packages based on the determination of fiscal policy and tools of the banking system; and study to increase medium and long-term mobilization of commercial banks.

In addition, the Council members also requested the Ministry of Planning and Investment to develop a set of criteria for evaluating investment efficiency to better assess the current state of the economy; clarify the causes of the recent economic growth slowdown to find solutions for the economy to achieve the economic growth target for 2016. In particular, there should be solutions to increase domestic demand and promote export growth; and reduce intermediary costs for businesses.

Also according to Deputy Minister Dao Quang Thu, inflation in the first 9 months of the year remained low, the consumer price index (CPI) in September increased by 0.54% compared to August, increased by 3.14% compared to December 2015 and increased by 3.34% compared to the same period in 2015. It is forecasted that inflation in 2016 will be controlled below 5% as set out in the National Assembly Resolution.

Deputy Governor Nguyen Thi Hong commented that the core inflation is stable, September compared to the end of 2015 increased by 1.58%, the same period increased by 1.85%, still within a narrow range. The challenge of monetary management is basically stable. In such inflationary conditions, there is room to adjust prices of goods and services.

Agreeing with the opinions expressed by the members and believing that it is also the Government's desire in its determination to restructure the economy, Deputy Prime Minister Vuong Dinh Hue asked the members to continue to closely follow developments in the international financial situation to continue discussing and advising the Government in managing the economy.

According to VNE