TBKTVN: What is your comment about the impacts of the short-term interest rate subsidisation package which terminates on December 31, 2009?

Lich: The short-term demand stimulus package with VND interest rate subsidisation has brought good effects. Thanks to the support, many businesses have been rescued from bankruptcy and able to maintain production. Moreover, the package has helped commercial banks develop credit.

However, I still think that we need to reconsider who is eligible under the interest rate subsidisation programme and the subsidised interest rate as well. The Government should maintain the programme and think of reducing the subsidised interest rate from 4 percent now to 2 percent and shortening the list of those eligible.

TBKTVN: Do you think that we also need to prolong the second demand stimulus package (long-term loans with interest rate subsidisation)?

Lich: The beneficiaries of the second package are farmers in rural areas and craft villages. I believe that we need to extend the loans under the programme and even consider extending them through 2010. Only by doing so will we be able to restructure the national economy. However, the most important thing is that businesses have reasonable and effective business plans.

TBKTVN: Some experts say that high credit growth is not the main thing that causes high inflation. What would be a reasonable credit growth rate?

Lich: I think that the credit growth rate of below 30 percent in 2009 would be a reasonable figure. I don’t think that we need to set a fixed credit growth rate, while we should be more flexible. If the credit growth rate is kept at below 30 percent, the total money supply in circulation is not big. As Vietnam’s economic development remains slow, a reasonable money supply would not greatly affect the inflation rate.

TBKTVN: So, do you mean that there is no need to worry about high inflation?

Lich: Economists in the world are urging their governments to strengthen demand stimulus packages or economic growth will slow. The situation is a bit different in Vietnam, where the Government, on one hand, is trying to stimulate demand, on the other hand, trying to prevent high inflation from returning.

Besides the money supply, there are other factors that can bring about inflation, such as crude oil prices and the prices of input materials for production. In 2008, Vietnam witnessed higher inflation because the prices of fuel, steel and food all increased dramatically. However, I have to repeat that if we can curb the credit growth rate at below 30 percent, we will be able to control inflation.

Source: VietNamNet/DT