The management of policy rates is part of the State Bank of Vietnam (SBV)'s responsibilities in pursuing its monetary policy’s objectives while ensuring fair benefits for depositors, banks and lenders, according to SBV’s Vice Governor Nguyen Thi Hong.

SBV's Vice Governor Nguyen Thi Hong at the meeting. Photo: VGP

Ms. Hong shared the view at a monthly government press briefing on September 4, in response to a question related to enterprises, including contractors of build-operate-transfer (BOT) projects, that are facing difficulties in accessing preferential loans.

According to Ms. Hong, since the first Covid-19 outbreak in Vietnam, the SBV has been implementing measures to support the economy, including a reduction in policy rates, so that banks could lower their deposit interest rates. 

On March 13, 2020, the SBV issued Circular No.1 instructing credit institutions and foreign bank branches to structure their repayment periods, waive and reduce interest rates and fees, as well as maintain debt classifications in order to support customers affected by the pandemic.

The move has allowed those struggling with repaying existing debts to access new loans, Ms. Hong said.

The average deposit interest rates as of the end of July declined by 0.6 percentage points per annum against late 2019, creating conditions for lower lending rates, Ms. Hong noted.

At the meeting, Vice Minister of Transport Nguyen Ngoc Dong said many BOT investors have to mobilize capital from other sources to repay banks’ debts.

To date, the transport sector currently has 61 BOT projects, including 6 under operation and one under construction. The Covid-19 pandemic, however, has severely affected revenues of BOT projects, therefore, measures are needed to support BOT firms, stated Mr. Dong.

Since the beginning of the year, the SBV has slashed policy interest rates three times amid sluggish credit growth.

In the first six months of the year, Vietnam’s credit growth was estimated at 2.8% year-on-year, much lower than the 5.7% rate recorded in the same period last year.