With the economy of Vietnam operating on loans, the State has been issuing bonds and enterprises borrowing from banks to make investments, economic expert Tran Du Lich told a conference on 2018 economic scenarios in HCMC on March 20.
Speaking at the annual conference held by Thoi bao Kinh te Vietnam, Lich, a member of the Prime Minister’s economic advisory group, said that to lower lending rates, the central bank needs to increase recapitalizing rates, scale up the ratio of lending to deposit, and prevent inflation at the same time.
Interest rates declined to a certain extent last year, and the rates are expected to go down slightly or at least stay as they were late last year, he said. Lich also recommended financial restructuring at enterprises to reduce borrowing.
According to Lich, economic growth is projected at 7.1% in quarter one and the economy is believed to be making progress. The Government should focus on creating a stable, transparent legal environment and gain trust among businesses, he added.
Speaking about exchange rates, Lich said that considerable rate fluctuations are unlikely.
Vu Viet Ngoan, a financial expert, shared the opinion, saying foreign exchange rates would not fluctuate greatly this year.
With regard to interest rate reductions, according to Ngoan, interest and exchange rates are the trickiest variables of the year. Although this year’s inflation pressure is greater than last year’s, inflation will be kept under control.
Besides inflation pressure, the dollar interest rates tend to rise on the global market, whereas Vietnam needs to keep exchange rates stable and attract local currency deposits.
In addition, banks still need to keep their borrowing-lending ratio at a reasonable level to cover bad debt. In case lending rates are lowered, deposit rates should also drop, which also depends on whether banks’ mobilization is affected and whether clients withdraw money or not.
According to Ngoan, limited liquidity at banks remains a challenge. There is even a big mobilization rate gap of up to 2% among banks.
It is also necessary to pay attention to indirect investments on the stock market, Ngoan noted.
Any major change on the stock market will pile pressure on the foreign exchange market, so increasing foreign reserves is crucial. - VNN -