By John Ruwitch
HANOI, Dec 4 (Reuters) - The Asian Development Bank anticipates more interest rate cuts in Vietnam and further widening of the currency's trading band, but said it would be cause for concern if the government quickened the pace of the measures.
Ayumi Konishi, the ADB's resident director, said on Thursday the bank planned to offer Vietnam $1.6 billion in assistance next year, and could give even more if the economy faced serious troubles.
The State Bank of Vietnam, the central bank, has cut benchmark interest rates by 400 basis points since late October, lowered reserve requirements for banks and allowed the tightly managed currency more room to depreciate -- all part of efforts to stave off economic slowdown.
"The actions being taken by the government, particularly on the monetary policy side, (are) understandable. We can certainly support them," Konishi told reporters on the sidelines of Vietnam's annual donor meeting.
"I certainly anticipate that there may be some further lowering of interest rates, then probably their foreign exchange regime, the band may be widened," he said.
"I do hope, and I do believe, that all these steps will be gradual... So far I don't think they have been going too fast. If they were to go faster than this, probably I would be worried."
Last month Prime Minister Nguyen Tan Dung told parliament Vietnam should keep lowering interest rates next year and manage the exchange rate flexibly in the face of a worsening global economy. [ID:nSP379508]
On the aid side, Konishi said the bank, one of Vietnam's biggest source of assistance, would consider adding to its planned funding if the economic situation worsened. "We are looking at increasing, or stepping up the level of our assistance. Last year, our pledge, or the indication we have made at the Consultative Group meeting last year, was $1.3-1.6 billion," he said.
"Probably, for next year we will try to really come up to that maximum level of assistance in the first place and then, if the economic difficulties coming from the global situation will impact more negatively on Vietnam, we even would be prepared to step up our effort." He did not give further details.
Vietnam's central bank said on its web site on Thursday experts estimated that official development assistance would be about $5.2 billion next year, including loans worth $4.6 billion and grants of $570 million, from $5.4 billion pledged for 2008.
The donor conference was expected to issue an official figure on Friday.