Vietnam still aiming for 6 pct growth despite slowdown

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Vietnam's government will not revise targets set for this year, aiming to control annual inflation at 7 to 8 percent and achieve economic growth of around 6 percent, an official said Sunday.

The government would maintain economic growth at a reasonable level, said Vu Duc Dam, head of the government office, amid concerns that the economy is slowing down.

Consumer prices were up 8.34 percent year-on-year in May, according to the General Statistics Office. Compared to April, prices only increased by 0.18 percent.

Meanwhile, economic growth weakened to 4 percent in the first quarter, prompting worries among economists and legislators that the target of 6-6.5 percent will not be attained.

Dam said after loans shrank in the first five months, banks will need to boost lending to support economic growth.

"Now the priority is to give the economy more money, extending credit by 2 percent each month," he told a press briefing in Hanoi. "Interest rates have fallen but they are still high and should be cut further to be in line with easing inflation."

Vietnam's central bank on Monday cut interest rates by 1 percentage point for the third month in a row, bringing refinancing rate to 12 percent and discount rate to 10 percent. The deposit rate cap has also been reduced to 11 percent from 12 percent.

Dam said while many companies are in need of capital, banks have ample funds, which means there is still a lot of room for credit growth.

Vinalines scandal

Commenting on the case of Vietnam National Shipping Lines, or Vinalines, whose officials are being investigated for financial mismanagement, Dam said the government will deal with any violations strictly.

Duong Chi Dung, former chairman of the shipper, is wanted by local police for his involvement in the scandal. Dung, 55, was appointed director of the Vietnam Maritime Administration in February. He has been suspended from the position since mid-May.

Dam said the government found no violations when reviewing the process by Dung was appointed to head the maritime administration.

He said Vinalines incurred losses of more than VND2.6 trillion (US$124.7 million) last year and VND1.2 trillion in 2020.

That compared to a gross profit of VND1.24 trillion the company posted in 2010. Last year, it also reported profits of VND62.15 billion.

Dam also said there is a plan, drafted by the Ministry of Construction, to invest VND100 trillion to Vinalines in order to expand its fleet. However, the plan will be reviewed by the government and has not been approved yet.

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