Hanoi, Vietnam, February 21, 2020—IFC,
a member of the World Bank Group, has increased trade finance limits for
Vietnamese banks as a rapid response initiative to address, in advance,
potential trade finance challenges triggered by the outbreak of the novel
coronavirus disease, known as COVID-19.
The spread of COVID-19 has caused business disruptions in Vietnam since
the first case was announced in late January. Apart from a fall in tourism
and associated services, the epidemic has affected cross-border trade impacting
manufacturing, agribusiness and other sectors.
In response, IFC is supporting Vietnamese businesses by increasing trade
limits for four client commercial banks including An Binh Commercial Joint
Stock Bank, TienPhong Commercial Joint Stock Bank, Vietnam International
Commercial Joint Stock Bank, and Vietnam Prosperity Joint Stock Commercial
Bank. The increased total limit of $294 million will enable these banks
to improve their capacity to cover payment risk in granting trade financing
to local companies, mostly small and medium enterprises.
“VIB welcomes this timely and meaningful initiative to cope with possible
liquidity constraints and de-risking trends during this challenging period,”
said Han Ngoc Vu, Chief Executive Officer, Member of the Board of Directors
of Vietnam International Commercial Joint Stock Bank (VIB). “IFC’s guarantee
will help local banks significantly extend trade finance to more importers
and exporters, some of which are credit-constrained and rely on bank trade
facilities to manage cash flows and purchase raw inputs.”
This initiative complements the State Bank of Vietnam’s call to financial
institutions to support local businesses, which may be affected by the
coronavirus outbreak — particularly those in trade and supply chain linkages.
“Leveraging IFC’s global experience in responding to several economic
crises in the past, the decision to increase trade limits is an effort
to ensure continued trade flows during this challenging phase. The expanded
trade finance line will help mitigate trade finance risks, thus softening
the impact of COVID-19 on the Vietnamese economy and the private sector,”
said Mehmet Mumcuoglu, IFC Financial Institutions Group Manager for East
Asia and the Pacific.
“IFC’s initiative, an effective response
to help ensure resiliency, shows our confidence in our local partner banks
as well as our commitment to strengthen Vietnam’s economy,” said Kyle
Kelhofer, IFC Country Manager for Vietnam, Cambodia and Lao PDR.
Following this fast-to-implement and flexible
trade finance instrument, IFC is exploring other expanded interventions
to extend its support to Vietnam to mitigate the economic impact of COVID-19
and help the nation sustain robust economic growth.
IFC—a sister organization of the World Bank and member of the World Bank
Group—is the largest global development institution focused on the private
sector in emerging markets. We work with more than 2,000 businesses worldwide,
using our capital, expertise, and influence to create markets and opportunities
where they are needed most. In fiscal year 2019, we delivered more than
$19 billion in long-term financing for developing countries, leveraging
the power of the private sector to end extreme poverty and boost shared
prosperity. For more information, visit www.ifc.org