11:14' 13/10/2009 (GMT+7)
VietNamNet Bridge – The State Bank (SBV) has announced that it will extend a subsidized-lending program that is widely credited with enabling Vietnam to maintain a positive growth rate in 2009 despite world-wide recession.
SBV said on its Web site October 12 that the policy extension will support businesses and individuals requiring medium to long-term capital.
The subsidized-lending program shaves four percentage points off interest rates on loans that preferred enterprises take from commercial lenders. Since it was introduced in February as part of the government's multibillion dollar stimulus measures, domestic banks have made loans totaling 409.4 trillion dong ($22.9 billion), the central bank said.
Banks will be able to offer the subsidized loans up to the end of 2010.
Whether or not to extend the subsidized loans has been a matter of considerable debate among economists. Some have argued for letting the program terminate at year end, expressing concern that as demand for Vietnam’s exports revives, easy credit could overheat the economy and possibly trigger a new bout of high inflation.
The Government this month forecast 6.8 percent year-over-year growth in the fourth quarter and five percent growth for all of 2009 -- lower than the 6.18 percent recorded in 2008. Vietnam's economy reportedly expanded 5.76 percent from July through September from a year earlier.
"The SBV is moving in a right direction because banks in Vietnam are still offering loans at interest rates that are much higher than those in other countries," Nguyen Hoang Hai, general secretary of the Vietnam Association of Financial Investors, told the Wall Street Journal, an American business newspaper.
SBV reported on October 9 that altogether, some 410 trillion dong (approximately $22.9 billion) in subsidized loans have been made since the programme was introduced in February as part of the Government’s economic stimulus package. The bank said that 17 percent of the loan amount went to state-owned companies, 67 percent to private enterprises, and the remainder to individual borrowers.
SBV, Wall Street Journal, Bloomberg, VNNB
