06:00 | 01/08/2020 Economy
(VEN) - International financial institutions have launched financial support packages to help businesses, especially small- and medium-sized enterprises overcome difficulties in the post-pandemic period.
The Asian Development Bank (ADB) announced a US$6.5 billion rescue package to address the immediate needs of its developing member countries as they respond to the Covid-19 pandemic. This includes US$3.6 billion in sovereign operations for a range of responses to the health and economic consequences of the pandemic, and US$1.6 billion in non-sovereign operations for micro, small, and medium-sized enterprises affected by the pandemic. ADB stands ready to provide further financial assistance and policy advice whenever the situation warrants, ADB President Masatsugu Asakawa said.
To provide support packages for its developing member countries in a quick and flexible manner, ADB will seek adjustments in its financing instruments and business processes. Subject to approval by ADB’s board of directors, adjustments will include faster access to emergency budget support for economies facing severe fiscal constraints and streamlined procedures for policy-based lending.
The International Monetary Fund (IMF) could make available about US$50 billion through its rapid-disbursing emergency financing facilities for low-income countries and emerging markets. Of which, some US$10 billion is available at zero interest rate for the poorest members through the Rapid Credit Facility.
The World Bank (WB) and the International Finance Corporation (IFC) approved an increased US$14 billion package of fast-track financing to assist businesses and countries in their efforts to prevent, detect and respond to the rapid spread of Covid-19. Specifically, IFC increased its Covid-19 related financing availability to US$8 billion as part of the US$14 billion package, up from an earlier US$6 billion, to support private businesses and their employees hurt by the economic downturn. The US$14 billion package also includes US$2.7 billion of new financing from the International Bank for Reconstruction and Development (IBRD), US$1.3 billion of new financing from the International Development Association (IDA), and reprioritization of US$2 billion within the existing IBRD and IDA portfolio.
According to the WB, it is working to provide a fast and flexible response based on developing country needs in dealing with the pandemic. This includes emergency financing, policy advice and technical assistance, building on the World Bank Group’s existing instruments and expertise. The financial package will provide grants and low-interest loans from IDA for low-income countries and loans from IBRD for middle-income countries. Vietnam, therefore, can get access to loans from IBRD.
IFC also announced increased trade finance limits for four Vietnamese banks, including An Binh Commercial Joint Stock Bank (ABBank), Tien Phong Commercial Joint Stock Bank (TPBank), Vietnam International Commercial Joint Stock Bank (VIB) and Vietnam Prosperity Joint Stock Commercial Bank (VPBank), to US$294 million to help private businesses overcome difficulties. The increased total limit of US$294 million will help improve these banks’ capacity to cover payment risks in granting trade financing to local businesses, mainly small- and medium-sized enterprises.
Opportunities for businesses
IFC is providing a US$75 million financing package to the Phu My Hung Development Corporation to maintain the corporation’s property development operations. This investment will allow the corporation to extend financial relief to clients, suppliers and contractors in its property value chain, helping preserve jobs and contributing to a resilient local economy.
Phu My Hung Development Corporation CEO Gary Tseng said local businesses are the main source of jobs, which drive the national economy. With the impact of the Covid-19 pandemic, IFC’s support will enable the corporation to extend financial relief to local clients, he said.
Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia and Laos, said IFC focuses on supporting the private sector in order to limit economic losses. IFC’s initiative, an effective response to help ensure resiliency, shows its confidence in local partner banks as well as its commitment to strengthen Vietnam’s economy, he said.