The Vietnamese government said late last week that it has decided to continue providing cheap loans with 2% interest subsidy in order to achieve the set gross domestic product (GDP) growth of 6.5% next year.
Under the decision, local state-owned commercial, joint stock, joint venture banks, branches of the foreign-invested banks and financial companies will provide loans to agriculture, forestry and fisheries, processing industries, sales of farm produce, forestry, seafood and salt for 24 months from early 2010.
“The move is aimed at ensuring the economy next year to grow faster than 2009, improve loan quality to stabilize the macro situation,” Prime Minister Nguyen Tan Dung emphasized in a report posted on the government’s website.
The government also decided to stop the short-term stimulus package at the end of 2009, under which VND414.828 trillion ($22.448 billion) was phased out for the economy as of December 10.
Speaking about Vietnam’s economic outlook in 2010, Truong Dinh Tuyen, adviser of the National Financial Committee and former Minster of Trade forecast that next year Vietnam’s economy will grow 6.5%, exports will expand 6%, trade gap will narrow and inflation will be curbed below 7%.
To achieve these targets, the government should focus on stabilizing the forex market and cross rates, Tuyen urged, assessing the decision by the State Bank of Vietnam, the country’s central bank, to devalue the dong on November 25 was a little bit late.
“Had the SBV decided earlier a couple of months earlier, the impacts on the macro situation would have been much better,” Tuyen noted.
Vo Tri Thanh, deputy dean of the Central Institute of Economic Management (CIEM) said that the domestic economy is on recovery track and rebounds of the global economies and exports will have good impacts.
Luckily, the U.S. dollar tends to depreciate, which eases pressures on the Vietnamese dong, Thanh said, forecasting the first quarter next year will be a tough time for governments and firms around the world.
Tran Du Lich of the National Assembly’s Economics Committee assessed that global economies enter the post-crisis period with demand still weak amid riks of high inflation due to loosened monetary policies.
Local banks will continue facing three thorny issues: interest rates, forex and medium and long-term loans, Lich said.
Le Xuan Nghia, a leading economist forecast that local banks will have to balance dollar and dong deposits thank to flexible monetary policies next year. (
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