Vietnam orders loan interest rate cuts for virus-hit firms
State Bank of Vietnam orders commercial lenders to exempt, reduce or delay interest payments due January 23 to March 31 on loans to businesses facing losses from the novel coronavirus epidemic, according to a statement posted on the regulator’s website.
The move comes as the nation’s fast-growing economy is at risk of slowing to below 6% for the first time in six years as the virus weakens sectors from tourism to manufacturing. The country’s gross domestic product, which expanded 7.02% in 2019, may grow 5.96% this year if the disruption of the virus continues into the second quarter, the government said earlier this month.
The central bank directed banks to assess losses the companies are enduring since the virus outbreak and ensure they maintain creditworthiness for future loans. The banks must report to the central bank as early as March 15 on the restructuring of these loans.
The central bank’s order will ease interest payments on about 11% of the banking system’s outstanding loans, valued at 925 trillion dong ($40 billion), Nguyen Quoc Hung, head of the central bank’s credit department, said in an interview February 20.
By John Boudreau – Bloomberg – February 24, 2020