VietNamNet Bridge – Governor of the State Bank of
Credit has been growing sharply in the last two or three months. Is there any latent risk in the hot credit growth?
Governor of the State Bank of
By the end of May, credit had grown by 14.01 percent over the end of 2008, while the credit growth rate limit approved by the Government for all of 2009 is 30 percent. We think that credit will increase further by 3 percent in June to 17 percent. However, credit growth will slow down in the last months of the year. 
I have to remind you that the credit growth situation this year is quite different from that in 2007. In 2007, the credit growth originated from an excess of money as the state purchased foreign currencies to stabilise the exchange rate.
In 2009, the State Bank is keeping strict control over the money supply. By the end of May 2009, SBV had just provided 43 percent of the total volume approved by the Government for the year. We have been shifting from tightening to loosening monetary policies, but the loosening is being carried out in a careful way.
The deposit interest rates offered by commercial banks have been increasing sharply. What are your comments about that?
The State Bank does not set a cap on deposit interest rates. It is the job of the banking association to come up with reasonable interest rates after discussions with its members. However, the association does not really want to do this job as we have been applying the basic interest rate scheme.
If you asked if I could see any risks with the increasingly high deposit interest rates, I would say I still could not see any risks.
We have seen two banks with “abnormal” problems in interest rates, but these are two very small banks with little influence.
What would you say about the risks which may occur when credit growth is hot?
Bad debt was 2.62 percent of total outstanding loans at the end of April and I cannot see any worrying signs in this.
Total outstanding loans for the real estate sector reached 151 trillion dong by the end of May, up by only 9 percent over the beginning of the year. Outstanding consumer loans reached 85 trillion dong, up by 11.6 percent.
Some experts have suggested that we need to stop providing interest rate subsidies to get capital supply and demand back on the normal track. What is your opinion about the suggestion?
The interest rate subsidisation has big impacts on the national economy. If we continue subsidising interest rates when the national economy recovers, this will distort the market. To date, we still do not have a figure about the GDP of the first six months. When we have escaped from the difficult period and stop the interest rate subsidisation, we will need to set up a plan to “reduce shock” in the post-interest rate subsidisation period.
VietNamNet/DTCK
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