Vietnam to Withdraw VND20.3Tln to Tame Inflation, Deflate Property Bubble

The State Bank of Vietnam, the country’s central bank, said on February 15 that it will ask banks and credit institutions to buy VND20.3 trillion (US$1.26 billion) of one-year mandatory treasury bills with interest rate of 7.8 per cent in a bid to tame inflation and deflate the property bubble soon.

 

The bank said in its statement that following the government's efforts to tame inflation and reduce rising consumer prices, it will carry out a tight, cautious monetary policy to control the pace of credit growth and stabilize the value of the dong.

 

Meanwhile, analysts said by adopting this move, the central bank will deflate the property bubble soon with the prices rocketing 50 per cent-100 per cent over the past months. The move will help narrow the country’s trade deficit, which reached US$1 billion in January this year.

 

Forty-one commercial banks and credit organizations, which each have funds of more than VND1 trillion as January 1, will have to buy the bills based on the size of their funds by March 17, excluding banks specializing in agriculture, rural areas and small credit organizations.

 

The bills will mature March 16, 2009, the bank said.

 

According to Nguyen Thanh Ky, the general secretary of Vietnam Securities Investment Association, the total outstanding loans for the local property sector has reached VND103 trillion and those for stock trading were VND16 trillion. Ky also proposed shifting 30 per cent of the country’s total outstanding loans of VND1,000 trillion to the stock market from the property field. (SBV, Youth)