Vietnam seeking foreign capital for demand stimulus programme

VietNamNet Bridge – Vietnam is expected to get an additional billion dollars from donors in the coming time to stimulate the national economy.

The negotiations on a $500 million loan from the Asian Development Bank (ADB) have been wrapped up. The bank on September 15 officially announced it approved the five-year Countercyclical Support Facility (CSF) loan for Vietnam to help the country mitigate the impacts of the global economic crisis.

The CSF, established in June 2009, supports ADB developing member countries needing to increase fiscal spending to counter the global economic crisis.

According to the Foreign Economic Relations Department under the Ministry of Planning and Investment (MPI), right after the initial information about the ADB’s loan was released, applications for borrowing money were submitted rapid-fire to the MPI by commercial banks and local authorities. To date, the investors of some 150 projects have also expressed desire to borrow capital from the ADB’s CSF loan.

However, the official said that only 20 projects will be chosen for capital disbursement, 50 percent of which will be transport projects.

The Prime Minister late last week instructed the State Bank of Vietnam, the Ministries of Finance and Planning and Investment to discuss the issue and report to the Prime Minister. The Bank for Investment and Development of Vietnam (BIDV) will take over the loan and disburse to suitable projects.

This is a short-term loan (five years with a three-year grace period); therefore quick disbursement is a top priority.

According to Nguyen Van Binh, Deputy Governor of the State Bank of Vietnam, in the current conditions, with trade volume decreasing, foreign capital growth increasing at a slower pace and the national economy’s development slowing down, it is very necessary for Vietnam to take out this loan in order to maintain its growth rate.

Agreeing with Binh, Deputy Head of the Vietnam Economics Institute Bui Quang Tuan said that the loan will be very helpful, and that while the country’s inner strength remains limited, Vietnam needs the support of donors.

Vietnam has also wrapped up negotiations on a credit package within the framework of the Eighth Poverty Reduction Support Credit (PRSC), which will also be a very important loan to help Vietnam carry out its demand stimulus programme.

Local newspaper Dau tu, additionally, has quoted a source as saying that Japan is likely to lend $150-200 million to Vietnam to support its economic stimulus package.

There has not been any information yet about the negotiations. However, sources say that the loan is likely to be inked by the end of the year.

VietNamNet/DT

PostsComments

Comments

You must be logged in to post a comment.