The State Bank of Vietnam (SBV) wants to restart a program to give businesses debt extensions amid economic challenges.
In a meeting with representatives of the central bank Thursday, business leaders said what they need most now is a delay in debt payment amid many financial difficulties.
Nguyen Ngoc Hoa, chairman of the HCMC Union of Business Association (HUBA), said that most export items saw a decline in the first quarter, which led to a slowdown in GDP growth.
Garment, seafood and wood products saw a decline in exports while some businesses in the steel and concrete sectors have been forced to shut down up to 90% of their operations, he said.
“Businesses are trying to maintain their operations amid plunging demand and therefore they do not have a need for more credit,” said Hoa. “What they need are loan extensions to survive this period.”
Hoa added that a reduction in loan interest rates will also help companies, as some businesses need long-term funding but cannot afford an interest of 10% or more annually.
Dao Minh Tu, deputy governor of SBV, said that the central bank is proposing a program to the government to allow for a debt extension.
The program was last initiated during the Covid-19 period and ended in June last year. Tu said that a resumption of the policy is now necessary as the economy is facing difficulties.
He admitted that the current loan interest rate is high for borrowers and that the SBV does not want it to be that way, but that it’s a reflection of the current economic situation.
Vietnam this month reduced its policy rate a move that goes against global trends as the United States and other central banks continue to lift rates. Tu said that this shows the great effort the SBV is making to lower interest rates.
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