Vietnam will cut its refinance rate and other policy interest rates as the government tries to support businesses and bolster a struggling economy.
The refinancing rate will be lowered to 6.5 percent from 7 percent from March 18, said Le Duc Tho, chief administrator at the State Bank of Vietnam. The monetary authority will make an announcement on cuts to “some other” policy interest rates later today, Tho said by phone.
Policy makers are trying to bolster an economy that the World Bank estimates will grow 5.4 percent this year, slower than a government target of 5.8 percent. The central bank last cut the refinancing rate in May 2013 and the repurchase rate in July after devaluing the currency to help boost exports, even as the highest level of bad debt among Southeast Asia’s biggest economies curbed lending and hurt Vietnam’s businesses.
“It is to promote economic growth,” said Alan Pham, Ho Chi Minh City-based chief economist at VinaCapital Group, the nation’s largest fund manager. “It will enable banks to lower lending rates to stimulate more borrowing for investment. That will help stimulate more economic activity.”