Vietnam’s central bank is cutting the refinancing rate by 50 basis points to 5% from Thursday in a bid to bolster the country’s economic growth. 

In addition, the State Bank of Vietnam will also reduce the overnight electronic interbank rate to 5.5% from 6%, whilst the discount rate will remain the same at 3.5%.

This is the third rate cut since March, Xinhua news agency reports, when the refinancing rate was 6% and the discount rate at 4.5%.

The measure is aimed at providing support to commercial banks in terms of loans for businesses and individuals, helping companies to navigate the continued economic uncertainty and bolstering domestic demand, say local media reports.

According to Fitch Ratings, Vietnamese banks’ total lending has remained slow-moving, falling to a 10-year low last month.

The State Bank of Vietnam said that as of 20th April, the banking system’s credit growth gained 2.57% from the end of last year, under the 6.42% growth figure during the same time last year.

According to experts, there has been an easing of the liquidity crunch over the past few weeks. That said, banks are still finding it difficult to bolster lending to individuals and businesses over fears of an economic slowdown and ongoing sluggishness within the country’s property sector.

In addition, Vietnam’s export-fuelled economy is facing headwinds from a global downturn as Q1 GDP growth decelerated to 3.32% from the Q4 2022 figure of 5.92%, according to the country’s General Statistics Office.