Banks repay bailout funds

HA NOI — Commercial banks have repaid VND34 trillion (US$1.78 billion) in bailout funds injected into the system by the State Bank of Viet Nam late last year and now had usable capital on hand of around VND30 trillion ($1.58 billion), State Bank Governor Nguyen Van Giau announced on the Government website yesterday.

The central bank had been required to pump funds into the banking system to ensure payment capacity of banks and capital for production, Giau explained. Meanwhile, the shortage of liquidity had driven banks to severely curtail credit.

Some economists were wondering, however, whether an easing of credit would now add to mounting inflationary pressure, with some blaming ‘confused monetary policy' and easy credit during most of 2009 as major factors in the current reheating of consumer prices.

"The budget deficit and bank credit both impact on consumer prices," admitted Giau. "However, credit has been controlled since last July. So the impact of credit on consumer prices has not been any greater than any number of other market factors [including] the surging prices of goods on world markets, high consumer demand during the recent lunar new year, and rising public utility costs."

Credit growth last year was 37.7 per cent, driven largely by the Government's economic stimulus package, which included a subsidised-interest loan programme aimed at boosting production during the global economic recession.

Credit growth this year has been targeted at a more modest 25 per cent, while credit grew during January and February of this year at rates of 0.26 per cent and 1.14 per cent month-on-month, Giau said. — VNS