¡¡By Huang Haimin Thai Thanhvan
HANOI, March 14 (Xinhua) -- Vietnam is focusing on tightening management over its monetary market, promoting local bourse and enhancing production to combat high inflation, in a move to ensure the country's stable macroeconomic development.
Facing the consumer price index (CPI) of 15.67 percent in February, the highest in more than a decade, the Vietnamese government has recently asked the State Bank of Vietnam (SBV), the country's central bank, to widen the trading band between Vietnamese dong and U.S. dollar to two percent from 0.75 percent, limit credit growth to 30 percent, lift compulsory reserves that must be maintained by credit institutions, and secure liquidity for commercial banks to meet payment needs.
Accordingly, the SBV has required credit institutions to raise their compulsory reserve ratios by one percentage point from Feb. 1. Specifically, the ratio applied on non-term deposits and term deposits of below 12 months in Vietnamese dong or foreign currencies is set to increase to 11 percent from current 10 percent, and that on terms deposits of more than 12 months in Vietnamese dong or foreign currencies to five percent from current four percent.
In a similar move to reduce cash in circulation, the SBV has ordered commercial banks to buy treasury bills totaling 20.3 trillion Vietnamese dong (VND) (nearly 1.3 billion U.S. dollars).
Besides, Vietnam is expected to issue more government bonds in Vietnamese dong and foreign currencies to minimize the dollarization, withdraw more idle cash to curb inflation, increase national currency reserves, or invest abroad, according to a recent instruction by Vietnamese Prime Minister Nguyen Tan Dung.
To stabilize the local monetary market, the SBV has required commercial banks not to offer interest rates of more than 12 percent a year on deposits in VND.
In addition to tightening the monetary market, Vietnam has tried to revive the declining bourse, an important channel to lure capital for the economy.
To drive investment back to the bourse, the government has tried to cool down the hot local real-estate market by asking banks to stop lending property developers, and imposing stricter land tax policies.
The government is expected to allow the State Capital Investment Corporation (SCIC), in charge of managing and trading state capital, to buy shares on the stock market to help it recover.
It has also planned to permit foreign fund management firms to open branches or establish 100-percent foreign-owned fund management companies in the country in the coming time.
Together with the monetary policies, the government has planned to offer financial assistance to farmers and continued to intervene petroleum prices when necessary.
In a recent press conference, Vietnamese Finance Minister Vu Van Ninh affirmed that the government did not float the petroleum price, despite allowing enterprises to set their own rates.
"The state still has control the petroleum price because it has fixed ceiling price for one liter of A92 petroleum at 15,000 VND (over 0.9 dollars), and state-owned enterprises make up 70 percent of the total petroleum on sale," he said.
The government would also continue to subsidize local fishermen who have invested in high-capacity ships to the tune of 30 percent of their commercial loan interests, he added.
Besides, the government has directed ministries and localities to boost production, review project with slow capital disbursement, tighten state budget spending, increase the effectiveness of capital usage, and prevent goods speculation.
Vietnam, which saw CPI of 12.63 percent in 2007, has set targets of posting economic growth of 8-8.5 percent in 2008, and keeping CPI below the rates.
