3-4% interest rate support package: Need to learn from experience

	Financial support package will contribute to promoting economic growth
	Support package of VND26,000 billion: Loosening conditions, some businesses still have difficulties in access
	Businesses expect support packages to come quickly

The implementation of the interest rate support package needs to draw experience and lessons from the 2009 support package. Source: Internet

More than VND100,000 billion will be supported with interest rates of 3-4%

On the evening of September 25, speaking at the Dialogue "Interest rate support package: Capital must go to the right destination", Nguyen Tuan Anh, Director of Credit Department of Economic Sectors, State Bank of Vietnam (SBV) said National Assembly President proposed to offer a support package of over VND2,000 billion, equivalent to VND60,000-65,000 billion of outstanding loans.

It is expected that this package will increase to about VND3,000 billion, equivalent to a loan balance of more than VND100,000 billion, with an interest rate of about 3-4% per year to support people and businesses.

Moreover, a representative of the State Bank said that the size of the support package is VND3,000 billion, but it is also necessary to take into account the solutions the banking industry has taken, there are many banks that have lowered interest rates three times since the pandemic started.

Recently, the banking industry has stepped in to support businesses.

Accumulated up to now, banks have reduced interest rates by over VND26,000 billion - which means that this is also the number that banks have shared profits with people and businesses. So if all measures are taken into account, the interest rate is supported more than calculated.

However, Dr. Le Xuan Nghia, member of the National Monetary and Financial Policy Advisory Council, director of the Institute of Business Research and Development, said that the scale of VND3,000 billion is too small and not enough to create momentum for the economy to recover.

In particular, this expert also analyzed a perspective from the interest rate support package that the Government implemented in 2009 to save the economy because of the world economic crisis in 2008. Accordingly, this support package was up to VND19,000 billion, businesses can borrow at an interest rate of 4-5%/year. But when implemented again, credit growth was loosened too much, up to 37.7% in 2009, 27.6% in 2010 and 12% in 2011 but pulled inflation up to 18.5 %, in 2012, inflation was 9.2%, while GDP did not grow much because it was eroded by inflation.

Therefore, Le Xuan Nghia said when implementing this support package, the Government needs to learn from experience and pay attention to ensuring three safe "pins" for the macro economy: one is credit growth at a reasonable level; the second is not to let inflation rise too much, the National Assembly allows inflation below 4%, but if this package is applied, it only accepts an increase of no more than 5%; the third is to solve the problems of the exchange rate, because lowering interest rates but increasing the exchange rate will have "trouble" with the US in currency manipulation.

In addition, Nghia also required to ensure the "closing" of the microeconomy, because the support package in 2009 left heavy consequences that have not been resolved yet, such as "0 dong" banks.

Besides, bank liquidity must be taken into account, carefully calculated with solutions on debt extension and postponement that the State Bank is implementing.

Fairness to all businesses

Also supporting this support package, according to Dr. Nguyen Quoc Hung, General Secretary of the Vietnam Bankers Association, the context of 2009 and 2021 is different, 2009 was a global economic recession, 2021 is a pandemic; in 2009, mechanisms and policies are not in line with international practices, but in 2021, the principles of safety and efficiency are guaranteed.

However, it is difficult for any business to access capital, because all businesses are affected by the pandemic, so Mr. Hung said that it is necessary to take measures for banks to reduce lending standards, moreover, beneficiaries should not be discriminated against in terms of both size and type of activities. In addition, there must be a policy to clearly identify beneficiaries and to ensure future inspection.

From a business perspective, Nguyen Quoc Ky, Chairman of the Board of Directors of Vietnam Tourism and Transport Marketing Joint Stock Company (Vietravel), said that Vietravel's previous revenue was about VND7,000-8,000 billion/year, but so far may not reach 10% of this number.

However, according to Ky, the interest rate reduction is still slow to be implemented, many banks are "stuck". While businesses are like banks, now we should share with each other. Bank products are money, businesses use that "oxygen" to breathe.

Therefore, experts said, this support package needs to be carefully calculated both in terms of implementation time; Budgets and commercial banks also have to pay fairly, strictly and quickly.

On the other hand, if this interest rate reduction package does not have its own mechanism, just follow the current regulations and standards, even large enterprises cannot meet the requirements. Therefore, the SBV and the Ministry of Finance need to sit together to discuss and build an appropriate interest rate support package.