Vietnam cuts credit, money growth targets to curb inflation

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Vietnam's government said it will further restrain lending growth and cut money supply expansion as it seeks to curb Asia's fastest inflation.

The government will limit credit growth to a maximum of 17 percent while cutting money supply growth to no higher than 13 percent this year, Vu Duc Dam, chairman of the government office, said in a briefing in Hanoi Monday.

Inflation in Vietnam "has been staying at a high level" compared with other countries and "lasting for a long time," Dam said. Although the government has implemented many measures, "the situation is still complicated," he said.

Vietnam's government has struggled this year to contain price pressure, steady the dong and rebuild its foreign reserves while sustaining the pace of economic expansion. Prime Minister Nguyen Tan Dung in February cut the credit growth target to below 20 percent from 23 percent and reduced the money supply growth target to between 15 percent and 16 percent from an initial goal of as much as 24 percent.

The government will "firmly" pursue its tight monetary and fiscal policies until the end of the year, Dam said at the briefing today. It also asked the central bank to "strictly" and "closely" monitor the foreign exchange rate, he said.

The State Bank of Vietnam has increased the repurchase, refinancing and discount rates to stem credit growth and slow price gains as the government tried to stabilize the economy. The central bank raised the repurchase rate in nine steps from 7 percent at the start of November last year to 15 percent in May 2011, before cutting it in July to 14 percent.

Consumer prices in Vietnam climbed 22.42 percent in September from a year earlier, easing from a 23.02 percent in August, according to figures released by the General Statistics Office on Sept. 24. This is also the fastest pace among 17 Asian economies tracked by Bloomberg.

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