Subsidy for interest rate offsetting and management fees to policy banks is the allocation of public investment capital for supporting policy banks to offset the difference in interest rates and management fees for loans of policy beneficiaries as prescribed by law, including small and medium-sized enterprises (“SMEs”).
The interest rate subsidy for SMEs was stipulated in the Law on Assistance for SMEs in 2017 and was guided in Decree No. 80/2021/ND-CP (“Decree 80”). Accordingly, in each period, the interest rate difference offsetted by the state budget for loans of start-up SMEs, SMEs participating in industrial clusters and value chains through credit institutions is 2%/years.
However, as of now, the enforcement of this policy still meet many difficulties. Therefore, on November 1, 2022, the Ministry of Planning and Investment (“MPI”) issued Documentary No. 7853/BKHDT-PTDN (“Documentary 7853”) in response to Document No. 7465/BTC-TCNH dated July 29, 2022 on some difficulties of the Ministry of Finance in guiding the interest rate offsetting to implement the lending subsidy for SMEs under Decree 80.
The MPI proposed the following contents:
Develop and issue guidelines on interest rate subsidy for SMEs:
The MPI proposes the Ministry of Finance to report to the Government on the development policy of the Decree instructing on interest rate subsidy for SMEs in accordance with current legal regulations, in order to create a basis for implementation.
After such guidance is completed and based on the need for offsetting the difference in interest rates for SMEs’ loans through commercial banks at that time, the MPI will coordinate with the Ministry of Finance to report to the Government to submit to the National Assembly for consideration and regulation on the use of the central budget reserve of the mid-term public investment plan.
Supplement the public investment estimation to provide interest rate offsetting for commercial banks:
There are a number of subsidy programs for interest rate offsetting through commercial banks previously adopted but have yet been paid by the state budget. The reason is that the legal basis for these programs is inadequate to put them into force. Specifically, those programs include:
- Subsidy for interest rate offsetting for agricultural damage reduction;
- Subsidy for interest rate offsetting for upgrading and building new fishing vessels;
- Subsidy for interest rate offsetting for social housing loans;
- Subsidy for interest rate offsetting for afforestation development;
- Subsidy for interest rate offsetting for rapid and sustainable poverty reduction for 61 poor districts;
- Subsidy for interest rate offsetting for production reorganization and ownership conversion for sugar companies and factories.
Given the current situation, the MPI has requested the Ministry of Finance to adjust and supplement the aforementioned contents to make definitive disbursement to commercial banks that have been implementing those programs but have yet been paid by the state budget.
Comment: