Vietnam’s Prime Minister Nguyen Tan Dung approved a master plan to restructure the economy, overhaul banks and speed up share sales of state-owned companies to bolster growth that is at its lowest since 1999.
Authorities will focus on resolving bad debt and cross-ownership in banks and boost transparency in the next two years, according to a statement posted on the government’s website late yesterday. They will revamp state-owned companies to focus on core business and accelerate share sales, it said.
Vietnam is struggling to boost an economy that expanded at the slowest pace in 13 years in 2012 as a slump in bank lending crimped domestic demand, adding pressure on the government to revamp the financial system. Growth has slowed due to falling productivity linked to inefficiencies in state-owned companies, banks and public investments, the World Bank said in December.
The master plan, to be implemented through 2020, aims to enhance the country’s competitiveness and growth, according to the statement. The government will pursue “cautious, flexible” monetary policies to curb inflation, maintain macroeconomic stability and ensure reasonable growth, it said.
The government has forecast 5.5 percent growth this year, and the pace could be faster, central bank Governor Nguyen Van Binh said in an interview with Thoi Bao Kinh Te Saigon, or Saigon Times, yesterday. The monetary authority may consider interest-rate cuts to spur expansion if price gains are contained, he said.
“If year-end inflation is likely to meet our 6 percent target, the central bank will consider cutting interest rates,” Binh said according to a separate transcript posted on the government website.
The central bank will propose to the prime minister a plan for a debt asset management company with guidance from the Politburo, Binh said. The monetary authority aims to keep the dong stable without fixing the rate, he told the Saigon Times. Any adjustments to the dollar-dong exchange rate would be no more than 3 percent over the course of the year, the paper said.