Trang Chủ
In the context of the global Economic recession and turbulence in the global market due to the Covid-19 pandemic, governments and central banks in many countries have unprecedentedly loosened their monetary policies, launched large-scale economic stimulus packages and taken fiscal measures to revive economies. All forecasts predict that the world economy may need many years to recover its pre-pandemic status. Domestically, Vietnam’s economic growth harshly decreased although it is one of the few countries to maintain positive growth rates. The 8-month average inflation rate stood at 3.96% (below the target of 4%), while the core inflation rate was 2.66%.
As guided by the Party and State, the SBV has proactively, drastic and promptly implemented monetary and credit solutions to support the economy in overcoming the impacts of the Covid-19 pandemic. restricted, the SBV has flexibly and synchronously used monetary policy tools to ensure liquidity for the entire credit institution system and the economy, maintaining the stability of the money and foreign exchange markets, create favorable conditions for credit institutions to lower lending interest rates. As of September 15, 2020, the total means of payment (M2) increased by 7.58% as compared to the end of 2019.
The SBV has simultaneously slashed policy rates twice by 1-1.5%/year. As such , Vietnam became 1 of the 2 countries with the biggest cuts in policy rates in the ASEAN, assisting credit institutions in accessing low cost capital from the SBV. The cuts were about 0.6-0.75%/year in ceiling rates of deposits with terms under 6 months, 1%/year in ceiling rates of short term loans for prioritized areas (to 5.0%/year at present). These rates were the lowest among those of the countries with conditions similar to Vietnam.
The exchange rate has been managed in a flexible manner by the SBV to support the stability and liquidity of the market, to ensure that legal foreign currency demands are sufficiently and promptly met, and to continue purchasing foreign currencies to supplement the state foreign exchange reserves. By September 21, 2020, the central exchange rate increased by 0.16% as compared to the end of 2019; the average interbank rate was equivalent to that of the end of 2019. The enforced Circular 01/2020/TT-NHNN provided a framework for credit institutions to restructure their maturity, apply exemption and reduction of lending rates, maintain loan groups, and support customers in accessing credits. The SBV required credit institutions to simplify their procedures and conditions for lending, minimize costs… to lower lending rates, sufficiently and promptly meet the economy's capital demand. By September 16, 2020, the credit volume increased by 4.81% compared to the end of 2019, increased by 10.19% compared to the same period of 2019.
Besides, the SBV promulgated the Circular < /span>05/2020/ TT-NHNN dated May 7, 2020 on refinancing applicable for the Vietnam Bank for Social Policiesto provide to employers facing financial difficulties to pay their employees whose jobs had been suspended due to the pandemic impacts regarding to Resolution No. 42/NQ-CP and Decision No.15/2020/QD-TTg.
Mr Pham Chi Quang, Deputy Director of the Monetary Policy Department – SBV
Based on the targets set by the National Assembly and the Government, domestic and global market developments, the SBV will regulate the monetary policy in an active and flexible manner in harmony with other macro-economic policies to control inflation, maintain the macro-stability and recovery the economy. The SBV will appropriately conduct OMO and regulate the liquidity of the credit institutions system to stabilize the market and promptly meet the capital demand of the economy, flexibly use the refinancing tool in accordance with market changes, capital need of credit institutions and Government's directions to support the recovery of the economy.
Credit institutions are required to minimize their costs to further lower lending rates, simplify internal procedures and processes in order to support new loans without loosening lending standard requirements while maintaining credit safety and the banking system's stability. The SBV will be ready to adjust and increase credit growth limits for credit institutions which are eligible to extend healthy credits to meet the capital needs of the economy.
The SBV will actively regulate the interest rates and exchange rates in accordance with other macro-policies, inflation, market developments foreign and monetary policy targets; conduct currencies purchases/sells in a flexible manner to stabilize the market and the exchange rate to be proactive in front of global changes, stabilize the macro-economy, control inflation, promote business and production activities and strengthen the State foreign exchange reserves when market conditions become more favourable. < br />
