On February 1 the central bank cut the benchmark interest rate to 7 percent from 8.5 percent as the government struggled to buoy an economy which expanded at the slowest pace in almost a decade last year amid the global financial crisis.

The bank also lowered the refinancing rate to 8 percent from 9.5 percent, and trimmed the discount rate to 6 percent from 7.5 percent.

Policy makers are continuing to loosen monetary policy “to support economic growth” by keeping rates unchanged, Bloomberg quoted Phung Trung Kien, a Hanoi-based analyst at the securities unit of Vietnam Joint-Stock Commercial Bank for Private Enterprises, known as VPBank, as saying.

Loan subsidy

The central bank also reported Wednesday that commercial banks had lent a combined VND157.8 trillion (US$9.01 billion) as of March 20 to businesses at subsidized interest rates, of which state-owned banks and people credit funds lent VND119.6 trillion.

State-owned firms borrowed VND57.9 trillion, non-state firms VND94.61 trillion ($5.41 billion) and co-operatives and individuals the rest.

The government had decided in January to use VND17 trillion ($970 million) from an economic stimulus package to provide a 4-percent interest subsidy on loans to companies that export, import or produce essential goods.

The economy expanded 6.23 percent last year after growing a record 8.5 percent in 2007, according to the General Statistics Office. That was the slowest since it grew 4.77 percent in 1999.

Source: Thanhnien News