The Prime Minister on October 31, 2007 released the Instruction No 23, requesting ministries to implement drastic measures to stabilize prices in the last months of 2007 and the traditional Tet.

The Prime Minister has requested the Ministry of Finance and SBV to strengthen the measures to develop the stock market, carry out the solutions to stabilize the monetary market and avoid shocks to the national economy.

SBV has been requested to maintain the strict control over commercial banks’ operation, especially the loaning to securities investors. The Government, once again, emphasized the need to control the loaning to securities investors, always considered as very risky.

Prior to that, bankers and banking experts voiced the same proposal to amend the Decision No 03 by the central bank, which said that banks cannot lend to securities investors more than 3% of their total outstanding loans. The Decision 03 with strict regulations is believed to hinder the development of the stock market because it stops the cash flow into the market. Head of the Banking Development Strategy Department under SBV said that no other country in the world applies such strict regulations on loaning securities investment like in Vietnam.

Several days ago, mass media, quoting reliable sources, reported that the central bank is considering amending the Decision 03, removing the upper limit of 3% for the loans for securities investment. Nevertheless, with the Prime Minister’s instruction, it is very likely that the amendment of the decision would be postponed.

The Prime Minister has also asked SBV to join forces with the Ministries of Finance and Planning and Investment to strictly supervise the foreign currency flowing in and out from the stock market.

In the immediate time, SBV will have to continue taking necessary measures to withdraw money from circulation by issuing short term SBV’s bonds, and buying foreign currencies in to keep the total payment instruments at suitable levels and avoid the sharp devaluation or revaluation of the local currency.

The Ministry of Finance will also join forces in withdrawing money from circulation to curb the inflation by issuing Government bonds in 2007 and 2008, while speeding up the disbursement for state budget funded construction projects.

The CPI reportedly increased by 8.12% in the last 10 months, coming closer to the 8.3% level predicted by SBV, and possibly approaching the GDP growth rate for this year.

According to the Taskforce on Domestic Market Regulation, the CPI would increase by another 0.4% in November.

Source: TBKTVN.