The Governor of the State Bank of Vietnam explained the reasons for the slow disbursement of the 2% interest rate support package.

Governor of the State Bank of Vietnam, Nguyen Thi Hong, at the meeting on the afternoon of May 25. (Photo: DUY LINH).

Continuing the agenda of the 7th Session of the 15th National Assembly, on the afternoon of May 25th, the National Assembly continued its discussion in the plenary hall on the Report of the Supervisory Delegation and the draft Resolution of the National Assembly on the results of the thematic supervision of "the implementation of Resolution No. 43/2022/QH15 dated January 11, 2022 of the National Assembly on fiscal and monetary policies supporting the socio-economic recovery and development program and the resolutions of the National Assembly on a number of important national projects until the end of 2023".

Member of Parliament : Interest rate subsidy policy is not working effectively.

Expressing his views, delegate Vu Tuan Anh ( Phu Tho province delegation) argued that the policy of interest rate support through commercial banks has not been effective, as the results achieved from the beginning of the program until the end of 2023 only reached about 3.05% of the policy's scope.

According to the delegates, practical experience shows that the principles for implementing the policy under Government Decree 31 are not appropriate or clear. Guidance from relevant agencies is also incomplete and unclear. Many businesses, cooperatives, and household businesses are facing difficulties due to the impact of the Covid-19 pandemic, resulting in high credit outstanding, while the conditions for borrowing with interest rate subsidies are very strict to ensure the safety of credit operations.

The scene at the meeting. (Photo: DUY LINH)

This has led to many businesses, cooperatives, and household businesses not meeting the conditions to receive interest rate subsidies. In addition, many businesses are apprehensive about inspections, audits, and investigations, as the Supervisory Delegation has pointed out, so even when eligible for state budget support, they do not apply for interest rate subsidies.

While acknowledging that businesses are eager to receive interest rate subsidies under government policies, but that implementation has not met expectations due to various reasons, the representative suggested that the Government should conduct a more thorough assessment of the causes to learn lessons when formulating similar policies in the future.

Other tax and policy solutions could be considered instead of a 2% interest rate subsidy.

Speaking further at the discussion session, Governor of the State Bank of Vietnam Nguyen Thi Hong stated that Resolution 43 was implemented in the context of a complex, unpredictable, and unprecedented global and domestic situation. Globally, due to the impact of the Russia-Ukraine conflict, countries implemented tight monetary policies. Domestically, there were also a number of unfavorable factors: the SCB Bank incident, the frozen real estate market, difficulties in corporate bond issuance, etc.

As a member of the Government, Governor Nguyen Thi Hong witnessed the resolute efforts of the Government, the Prime Minister, the Deputy Prime Minister, and other members in implementing programs and policies to overcome difficulties for the economy.

Following Resolution 43/2022/QH15, the Government assigned the State Bank of Vietnam to lead the coordination with ministries and agencies to develop and submit Decree No. 31 on the 2% interest rate support policy. The Governor of the State Bank of Vietnam stated that no other program has received as much time and effort from the State Bank of Vietnam in its implementation. Numerous conferences were held, and instructions were given to each provincial and city branch to implement the program in their respective localities.

Governor of the State Bank of Vietnam, Nguyen Thi Hong, at the meeting on the afternoon of May 25. (Photo: DUY LINH)

Explaining the low implementation results of the policy, the Governor of the State Bank of Vietnam stated that this is one of the programs under Resolution 43/2022/QH15. From the outset, it was determined that this policy is to support businesses with the potential for recovery, i.e., those capable of repaying loans, and not a policy to solve the problems of all businesses in the struggling economy.

"Because the loan capital for the program comes from funds mobilized by credit institutions from the public. Only the 2% interest rate subsidy comes from the state budget. Therefore, credit institutions must lend in accordance with current legal regulations and ensure the ability to recover the debt. So, the amount disbursed depends largely on the decisions of businesses and credit institutions," the female Governor explained.

Governor Nguyen Thi Hong also noted that the State Bank of Vietnam had submitted a detailed report on the difficulties and limitations of this program to the Government and the National Assembly.

Responding to the assessment in the National Assembly's supervisory delegation's report that one of the reasons for the low disbursement rate under this policy is "insufficient communication with customers; according to a VCCI survey, only 29.5% of businesses are aware of this policy," Governor Nguyen Thi Hong suggested further consideration of this assessment.

The Governor of the State Bank of Vietnam stated that, in order to implement the program, the State Bank of Vietnam, in addition to organizing conferences, also requires its branches in provinces and cities to coordinate with departments and agencies in local provinces and cities to organize conferences connecting businesses and banks, with the participation of business associations.

“In addition to organizing conferences, the State Bank of Vietnam branches in localities also organize networking conferences and invite representatives from business associations. This means that members of business associations are able to access information through their representatives. Along with that, the press has been very active in publishing directives from the Prime Minister, the Government, and the State Bank of Vietnam; credit institutions also post information on their websites so that customers can stay informed.”

"The VCCI only surveyed 8,000 private enterprises, which is less than 1% of the total number of enterprises nationwide, and the survey was conducted over a short period, so it cannot be used as a guide to evaluating the entire program," Ms. Nguyen Thi Hong clarified.

A view of the meeting on the afternoon of May 25th. (Photo: DUY LINH)

The Governor of the State Bank of Vietnam expressed his appreciation for many opinions from National Assembly deputies who suggested that, in a complex and unprecedented context, policies might not be entirely in line with reality, but the important thing is to learn valuable lessons about how to support businesses and individuals. The Governor emphasized that the policy is not about businesses borrowing only because of the 2% interest rate subsidy, but rather about the business's decision on what they will use the loan for and their ability to repay it.

"Interest rates are just one of the input costs, so to support businesses, tax solutions and other policies could be considered," said Ms. Nguyen Thi Hong.

The Governor concluded: With the 40 trillion VND package for interest rate support, 3.05% had been disbursed by the end of 2023, and the program has concluded. The Government has reported and proposed to the National Assembly not to mobilize additional resources for this program. If the 2% interest rate support policy continues, it could be integrated into another program, such as transferring it to the Social Policy Bank's support policy or other social security programs.

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