VietNamNet Bridge – It is highly possible that the credit liberalization mechanism would be kicked off in July 2012. If so, the total credit to be pumped to the national economy may reach 70 trillion dong a month.
Interest rate policy fails
Some experts said earlier this year that a demand stimulus package would be unfeasible for 2012. However, the situation has turned round and economists believe that a similar demand stimulus package launched in 2009 could be repeated in 2012.
The State Bank of Vietnam has slashed the key interest rates four times in an effort to make loans accessible to businesses, thus helping promote production and business. However, the move by the central bank has not brought the desired effects, whiles businesses have become exhausted.
Eximbank, Vietcombank and BIDV, the biggest banks in Vietnam, all have announced the lending programs with low interest rates. However, the preferential loans have not been provided in a large scale. Though commercial banks, especially the ones in G14 (the 14 most powerful banks), reportedly have profuse capital, they still cannot push up lending.
Eximbank remains the only bank which has reported the satisfactory disbursement of loans. It disbursed 2700 billion dong just within one week since the day it launched the lending program with the interest rate of 7 percent per annum. Meanwhile, the disbursement by other commercial banks still has been going at a snail’s pace.
As such, after four months since the day the loosened credit policy was kicked off, cheap loans remain inaccessible to businesses. It is very difficult for enterprises to borrow money at the interest rates of 15-16 percent per annum, while only a few can borrow at 12-13 percent.
Vietnam needs a 200 trillion dong demand stimulus package
As the move by the State Bank to slash interest rates does not bring the desired effects, experts believe that the government should take more drastic measures to improve the situation. A demand stimulus package has been, once again, put forward for discussion.
It was not by chance that some experts, including Nguyen Tran Nam, Deputy Minister of Construction, Le Xuan Nghia, a member of the National Advisory Council for Finance and Monetary Policies, in early June implied the huge credit of up to 200 trillion dong to be pumped into the national economy in the second half of 2012.
After that, the information was also mentioned by Deputy Minister Nguyen Xuan Phuc before the National Assembly.
It is highly possible that the credit liberalization mechanism would be kicked off in July 2012. If so, the total credit to be pumped to the national economy may reach 70 trillion dong a month.
If this comes true, the 2012’s demand stimulus package has the same scale with the 2009’s one, worth 143 trillion dong.
To date, the State has announced the bailout package of 29 trillion dong focusing on exempting and reducing tax for businesses. However, the package, as commented by experts, is big enough to help businesses drag out their miserable existence, while it would not be able to settle the problem to the very root.
If the new demand stimulus package is launched in the second half of 2012, the markets would be able to warm up after a long period of hibernation. Especially, the real estate market, to which the government pays the special attention as commented by Le Xuan Nghia, would see considerable improvement.
The report by the National Finance Supervisory Council released in 2011 showed that the outstanding loans to the real estate sector had reached 348 trillion dong, not 200 trillion dong as announced by the Ministry of Construction. Meanwhile, the bad debt had reached 56 trillion dong.