Money supply up 6.84% in first half
By Lan Nhi - The Saigon Times Daily
HANOI – The total money supply (M2) in the year’s first half is estimated to pick up 6.84% against late 2011, said a press release of the Government Office on Tuesday.
M2 in six months grew 6.84% from December last year, and was up 4.47% as of end-May, versus the year’s target of 14-16%, stated the release coming after the regular meeting of the Government on Tuesday.
The total deposit balance at credit institutions increased 7.83%, showing that the banking system’s liquidity is getting better.
“The total outstanding loans of the economy is gradually rising, foreign exchange rate is stable, international balance of payments has improved,” said the Government.
The Jan-Jun M2 growth is much higher than the level of 2.33% of the year-ago period, while inflation has declined sharply year-on-year.
The Government noted that despite the increases in M2 and total deposits, the total outstanding loans in the first six months stayed at a low level. Governor Nguyen Van Binh of the central bank told the National Assembly (NA) meeting in mid-June that credit growth was almost nil by then.
The Government stressed the need of reasonably regulating money supply and credit growth in the second half to ensure the growth target and prevent high inflation from returning. In fact, money supply including credits and spending from the State budget is poised to increase in the second half.
Deputy Minister of Finance Nguyen Thi Minh said only VND81 trillion out of VND180 trillion of investment capital had been disbursed in the year’s first half, meaning VND99 trillion will be disbursed from now to the year’s end.
In addition, only 24% of the Government bond capital was disbursed in the past six months As such, some VND22 trillion will be disbursed every month from now to the year’s end to speed up the project progress, remove difficulties for businesses and stimulate the market demand.
Regarding the socio-economic situation in the first six months, the Government members shared the view that drastic anti-inflation measures had slowed down CPI growth. As of end-June, CPI has risen 2.52% against December last year, and 6.9% year-on-year.
However, challenges remained as the Jan-Jun gross domestic product (GDP) growth only reached 4.38%, demanding greater effort to achieve the year’s growth target of 6-6.5%.
Furthermore, businesses encountered many difficulties with high lending rates and huge volumes of unsold products. The number of dissolved, bankrupt and suspended enterprises went up.
Speaking at the Government meeting on Tuesday, Prime Minister Nguyen Tan Dung stated the economic targets for 2012 would remain unchanged.
Therefore, the Prime Minister requested the central bank to accelerate the lending rate reduction in line with control the consumer price index (CPI). In addition, the central bank was urged to restructure debts and weak banks, and regulate interest rates in accordance with the inflation target (7-8%).
Meanwhile, the Ministry of Finance was asked to control the State budget revenues and keep budget deficit below the level set by NA.
The Government members called for consistency in realizing the target of curbing inflation, stabilizing the macro-economy and guaranteeing social security. Economic restructuring needs to be carried out step by step, aiming at improving quality, efficiency and competitiveness in order to achieve the socio-economic targets set for 2012.
In addition, there should be favorable conditions for enterprises to access credit capital, such as boosting loan guarantee, providing export credit insurance and prioritizing credits for agriculture, rural and export.