The 40,000 billion VND interest rate support package has only disbursed 256 billion VND.

In order to continue to resolutely and effectively implement solutions to remove difficulties for production and business, in a recent telegram, Prime Minister Pham Minh Chinh requested the State Bank to review policy credit packages such as the VND40,000 billion package supporting 2% from the state budget to promptly support enterprises, cooperatives and business households.

According to a recent report from the State Bank, the amount of interest rate support from this package has only reached nearly 256 billion VND, about 0.64% of the total amount and 1,784 customers have received support. Interest rate reduction support is a policy that any borrower wants, but why is the disbursement rate not high?

Many reasons for slow disbursement of 2% interest rate support package

The State Bank acknowledged that the results of interest rate support were not as expected due to a number of problems.

Thanh Hoa Seafood Import-Export Company, which specializes in exporting clams, is among the group receiving 2% interest rate support. They had their loan interest reduced by the bank. However, due to the decline in export activities, the business has had its support stopped.

"The company has also received timely support from the bank to meet the capital needs, however, not having any profit is also a common difficulty for businesses," said Ms. Trinh Thi Cuc, CEO of Thanh Hoa Seafood Import-Export Company.

According to regulations, businesses that want to reduce interest rates by 2% must prove their ability to recover and repay debts. Therefore, with the general difficulties of the economy , many small businesses find it difficult to meet this requirement.

"There are difficulties with procedures and paperwork. We are currently investigating. In fact, we are a small business so we have not been able to access this source of capital," said Mr. Duong Ngoc Hanh, Director of HBT Vietnam Precision Mechanical Joint Stock Company.

The bank said that although it had widely informed about this support package, the number of customers who submitted qualified applications was not much. However, when Agribank used its own capital to reduce interest rates for the right target group of the 40,000 billion VND package with simpler procedures, the number of customers approached was quite large.

"All banks are facing difficulties. Although we have directed more than 11,000 credit officers to implement, up to now we have only implemented more than 44 billion. In addition, we have implemented with commercial capital to reduce for subjects under Decree 31 by nearly 1,000 billion VND, without using the state budget. The biggest reason is the documents, procedures, conditions for customers to fully meet and the fear of psychology", said Mr. Pham Toan Vuong, General Director of Agribank.

The State Bank also acknowledged that the results of interest rate support were not as expected due to some problems such as businesses' fear of inspection, they considered the benefits of 2% interest rate support and the costs incurred when monitoring records, documents, post-inspection procedures...

Proposal to amend the 2% interest rate support package from the state budget

The VND40,000 billion support package is effective until December 31 this year. The State Bank expects the cumulative interest rate support amount by the end of this year to only reach about VND2,570 billion, equivalent to less than 6.5% of the total package, meaning that over 90% of the support budget will be difficult to disburse.

To help the policy be effective, many opinions have proposed changes to this package, to help the budget funds be used promptly, supporting people and businesses to recover the economy.

Experts suggest not to continue to amend the criteria and conditions for receiving the 2% interest rate support. Instead, the authorities can research and transfer budget resources to other policies that are feasible and have room for implementation, because the current problems are not easy to find solutions.

"The recovery is only possible when we decide to lend, but we don't know what will happen 2-3 years from now. Many businesses and credit institutions are afraid of inspection and audit. We have clearly identified the cause, so we should move on or switch to another package to ensure more efficiency," said Can Van Luc, chief economist of BIDV Bank.

The State Bank expects the cumulative interest rate support amount by the end of this year to only reach about VND2,570 billion.

Assuming that this year the disbursement is as expected by the State Bank, there is still more than 37,000 billion VND left. Many recommendations suggest that this source of money can be converted into credit guarantee funds, with more flexible lending conditions, without requiring real estate mortgages to help small and medium enterprises.

"Switch to establishing a national guarantee fund, combining 26 local funds into a common fund, with an initial charter capital of 20,000 billion plus 1,568 billion of local funds to lend unsecured loans, because according to current regulations, guarantees still require collateral, and an additional 2% guarantee fee must be added," said Mr. Pham Xuan Hoe, former Deputy Director of the Institute of Banking Strategy, State Bank.

In addition, experts also recommend that unused capital can be transferred to fiscal policies, supporting direct tax and fee reductions for people and businesses.

In just over half a year, the VND40,000 billion interest rate support package will expire. The State Bank has also sent a document to the Ministry of Planning and Investment on the results of interest rate support to serve as a basis for developing a plan to propose to competent authorities to adjust the unused interest rate support expenditure to other forms and support policies.

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