Tourists in Da Nang city. Tourism and associated services are among the hardest hit sectors by the COVID-19 epidemic (Photo: VNA)Hanoi (VNA) - The International Finance Corporation (IFC) announced it has increasedtrade finance limits for Vietnamese banks to improve their capacity to coverpayment risks in granting trade financing to local companies affected by the outbreakof the novel coronavirus (COVID-19).
The spread of COVID-19has caused business disruption in Vietnam since the first case was announced inlate January. The hardest hit areas include tourism and associated services,cross-border trade, manufacturing and agribusiness, among other sectors.
IFC is supportingVietnamese businesses by increasing trade limits for four client commercialbanks including An Binh Commercial Joint Stock Bank (ABBank), Tien PhongCommercial Joint Stock Bank (TPBank), Vietnam International Commercial JointStock Bank (VIB) and Vietnam Prosperity Joint Stock Commercial Bank (VPB).
The increased totallimit of 294 million USD will enable these banks’ capacity to cover paymentrisks in granting trade financing to local companies, mostly small and mediumenterprises, IFC said in its press release on February 21.
“VIB welcomes thistimely and meaningful initiative to cope with possible liquidity constraintsand de-risking trends during this challenging period,” said VIB’s ChiefExecutive Officer Han Ngoc Vu.
“IFC’s guarantee willhelp local banks significantly extend trade finance to more importers andexporters, some of which are credit-constrained and rely on bank tradefacilities to manage cash flows and purchase raw inputs.”
This initiativefollows the State Bank of Vietnam’s call to financial institutions to supportlocal businesses, which may be affected by the coronavirus outbreak– particularly those in trade and supply chain linkages.
“Leveraging IFC’sglobal experience in responding to several economic crises in the past, thedecision to increase trade limits is an effort to ensure continued trade flowsduring this challenging phase. The expanded trade finance line will helpmitigate trade finance risks, thus softening the impact of COVID-19 on theVietnamese economy and the private sector,” said Mehmet Mumcuoglu, IFCFinancial Institutions Group Manager for East Asia and the Pacific.
Following thisinitiative, IFC is also exploring other expanded interventions to extend itssupport to Vietnam to mitigate the economic impact of COVID-19 and help thenation sustain robust economic growth, said Kyle Kelhofer, IFC Country Managerfor Vietnam, Cambodia and Laos./.
VNA
