Vietnam's government aims to bring down inflation next year and it will cut interest rates accordingly, an official said Thursday.
Inflation is projected to reach 7.5 percent this year before easing in 2013 and the government has ordered the central bank to reduce interest rates in line with the increase in price of consumer goods, Vu Duc Dam, chairman of the government's office, said at a press briefing in Hanoi Thursday.
Interest rates for businesses now range between 10 and 15 percent while loans have increased 4.15 percent since the end of 2011.
Credit has expanded at a much slower pace than expected as the whole banking system is under stress, with banks becoming cautious with lending to avoid worsening the bad-debt predicament.
State Bank Governor Nguyen Van Binh said earlier this month the ratio of bad debt in the country's banking system was 8.82 percent as of the end of September.
Dam said at Thursday's press briefing that concerted measures will be taken to help reduce bad debts in the country, including dealing with inventories and the real estate market downturn.
He said commercial banks, however, have to take care of their own problem by setting aside enough provisions to deal with bad debts. Total risk provisions currently stand at VND75 trillion (US$3.6 billion), he said.
Deputy Minister of Industry and Trade Tran Tuan Anh said the government's efforts to drain stockpiles have been successful, with inventories of many products returning to normal levels.
Consumer prices in Vietnam increased 7.08 percent in November from a year earlier.
The government estimates the economy will expand by 5.2 percent this year, before picking up to 5.5 percent in 2013.
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