Economists wax on monetary policy
06/08/2010 - 28 Lượt xem
Experts say the State Bank has every reason to tighten the monetary policy, but isn’t enough to curb inflation.
Le Dang Doanh, former Head of the Central Institute for Economic Management (CIEM): one stone kills one bir
The actions taken by the State Bank of Vietnam are a step in the right direction. However, it seems hat the bank has taken an overly strong measure in its latest move. However, one stone kills one bird. The reduction in money supply will mostly influence the private economic sector, while the State-owned sector, which can get capital from ODA and the State budget will see little impact. Therefore, the central bank’s measures to limit cash in circulation will only have a limited effect in curbing inflation
With the tightening of the monetary policy, Vietnam’s economic growth will slow. Vietnam should be flexible in implementing its tasks. A lower inflation rate will ease the troubles of poor people, and, therefore, Vietnam should continue working towards this end.
Associate Prof Dr Nguyen Van Nam, former Member of the Prime Minister’s Research Team: right solution, but not enough
The measures taken by the central bank will not be enough to curb inflation. We need other financial measures as well, like ensuring effective and efficient Government and State-owned sector spending
The measures by the central bank to curb inflation will affect businesses in the short-term and may dissatisfy investors, but they will help Vietnam achieve more sustainable growth.
Dr Pham Do Chi, Economist
High inflation is badly affecting the lives of 85% of Vietnamese people; stopping inflation must be the top priority. Meanwhile, the targets of 9% GDP growth rate, export increase and stock market recovering should be more realistically determined.
It is necessary to reconsider the GDP growth rate and set lower targets until the inflation rate reduces to 5-6%. In order to reduce the total demand of the national economy, we have to cut at least 1% of the ratio of public investments on GDP (now at high level of 40%). We need to scale down the investments, but should encourage effective projects.
The central bank should replace the compulsory treasury bonds by six-month bonds with high interest rates (12% per annum, nearly equal to the inflation rate at 12.63% in 2007). The bonds can be extended every six months with the interest rates suitable to the inflation rates in 2008.
Dr Vu Dinh Anh, from the Ministry of Finance’s Finance Research Institute: the measures are not shocking
If considering the dose to this affliction, we can see the Government’s firm determination towards curbing inflation. I don’t think the measures will too terribly shock the national economy. However, I think Vietnam’s market will struggle if the central bank raises the compulsory reserve ratio to 13 or 14%, like China did.
In the time to come, enterprises will find it harder and more expensive to access bank capital. However, this should be seen as an opportunity to encourage enterprises to diversify capital sources instead of relying on bank loans
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On February 21, 2008, the State Bank of Vietnam pumped another VND10tril into circulation (interest rate at 15%). The overnight interest rate has been decreasing, but staying at high levels of 20-25%. Small banks are still have low liquidity. Commercial banks said that they have agreed to propose the State Bank of Vietnam to delay the deadline for purchasing compulsory bonds for three months instead of March 17 since banks have difficulties in arranging VND capital. An official from the State Bank in an interview to the press said that the central bank may consider delaying the deadline if necessary. Experts said that if the proposal is accepted, the hunger for VND will blow over |
Source: Tuoi tre
