SBV works to ensure $20b preferential credit package is effective and safe

SBV works to ensure $20b preferential credit package is effective and safe

The SBV has been actively developing and refining the mechanism to implement the largest credit package ever, with a total value of up to VNĐ500 trillion.

Deputy Governor of the State Bank of Vietnam (SBV) Đào Minh Tú speaks at the meeting. VNA/VNS Photo

Commercial banks have actively committed to participating in a VNĐ500 trillion (US$20 billion) preferential credit package, but it is necessary to clarify priority targets and the coordination mechanism to ensure the disbursement is both effective and safe, Deputy Governor of the State Bank of Vietnam (SBV) Đào Minh Tú said.

At a regular Government meeting on Tuesday, Tú said, according to the Prime Minister’s direction, the SBV has been actively developing and refining the mechanism to implement the largest credit package ever, with a total value of up to VNĐ500 trillion. This is a strategic move, demonstrating the Government's strong determination to promote infrastructure and technology development - two fundamental areas for the country’s long-term sustainable economic growth.

The SBV has clearly identified that this is not simply a credit policy but an important macro-management tool, which aims to create financial resources for businesses to invest in key infrastructure and digital technology industries. This is also a foundation for achieving the target of double-digit GDP growth in the near future.

According to Tú, the SBV last month worked directly with 21 commercial banks to discuss the implementation plan for this credit package. Of the total, four large State-owned commercial banks Vietcombank, VietinBank, BIDV and Agribank were identified as the main force, with each bank registering to fund VNĐ60 trillion. Meanwhile, 12 large-scale private banks registered to pour VNĐ20 trillion each and five smaller-scale private banks registered to pour in about VNĐ4 trillion each.

The VNĐ500 trillion credit package, which will prioritise businesses in infrastructure and technology, especially projects in digital technology, digital transformation and smart manufacturing, will enjoy a preferential interest rate of at least 1 per cent lower than the current average rate. At the same time, the preferential interest rate period will be extended for at least two years, creating favourable conditions for businesses to effectively implement projects.

According to the Deputy Governor, two key issues need to be clarified before widely disbursing the credit package.

First, although the demand for capital is hgh in the infrastructure and technology sectors, it is necessary to clearly identify priority targets for the package’s loans. Lending needs to closely follow the Government's policies and Party's Resolution 57-NQ/TW on breakthroughs in science, technology, innovation and national digital transformation, with an aim to avoid dispersion and duplication, and ensure the highest efficiency in capital use. In reality, not all projects among hundreds of thousands of projects are suitable or urgently need to be supported.

Second, the issue of balancing medium- and long-term loans from short-term capital sources of the banking system is also a significant challenge. Currently, commercial banks mainly mobilise short-term capital, so it is urgent to ensure the banking system's liquidity and safety. Therefore, the SBV is closely coordinating with relevant ministries and branches such as the Ministry of Industry and Trade, the Ministry of Construction, and the Ministry of Science and Technology to review and clearly identify key projects and groups of enterprises that require access to this preferential credit package.

“Lending for infrastructure projects with a term of five to ten years requires flexible coordination and compliance with the principles of credit system safety. This is the reason why the SBV is actively requesting ministries and branches to issue soondocuments specifying the list of priority projects and industries, in order to help banks feel secure in implementation and minimise liquidity risks,” Tú said.

According to the Deputy Governor, this month, the SBV and commercial banks will continue to step up preparations to disburse soon the credit package. Identifying the right priority targets, implementing and disbursing capital in a timely and effective manner will be prerequisites for achieving the dual goal of promoting growth and ensuring macroeconomic stability.    

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