January 24, 2013 / 8:51 AM / 5 years ago

UPDATE 1-Vietnam cuts dong loan rate to boost exports

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HANOI, Jan 24 (Reuters) - Vietnam has cut the interest rate on dong loans used to support export activities to 10.2 percent per year from 11.4 percent, the central bank said on Thursday.

The new rate came into force as of Jan. 17, the State Bank of Vietnam web site (www.sbv.gov.vn) said in a statement, citing a Finance Ministry circular.

Vietnam aims to boost export revenue this year by 10 percent to around $126 billion, after an expansion of 18.2 percent in 2012 to $114.6 billion, the trade ministry has said.

Export-support loans are issued by state-run Vietnam Development Bank, which along with the Vietnam Bank for Social Policies provides credit at the government's direction to help realise socio-economic development targets.

The lower lending rate could help ease the burden faced by exporters in the country, which ranks the world's largest in producer and exporter of robusta coffee. It stood second behind India in rice sales in 2012.

Textiles and garments, footwear and crude oil also contribute significantly to Vietnam's export revenue.

Economic growth in the Southeast Asian nation, whose gross domestic product is $142 billion, was 5.03 percent in 2012, the lowest since 1999.

For this year, the government forecasts growth to quicken to 5.5 percent. The higher target has prompted the State Bank of Vietnam to allow banks to increase lending, with the annual credit growth now targeted for 12 percent, compared with 8.9 percent in 2012. (Reporting by Hanoi Newsroom; Editing by Richard Borsuk)

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