The Asian Development Bank (ADB) has approved an extension of a $60 million-equivalent loan for Vietnam to expand the country’s financial sector reforms, state media reported Dec 1. The loan aims to help develop the country’s non-bank financial sector, including the securities and bond markets, and strengthen rules and regulations to enhance transparency and provide investor and consumer protection, and overall financial stability.
“The results will be a more diversified and resilient sector with an increased share of capital market financing of domestic investments to support economic growth,” Hasnah Omar, senior financial sector specialist in ADB’s Southeast Asia Department, said in a statement. The new assistance will help the capital markets increase their share of financing domestic investments, and reduce the funding mismatches that can occur with business bank loans. It also seeks to bring the regulatory environment for capital markets up to international standards, with improved information disclosure, and a stronger framework for issuing securities. The loan, to be used for the 2nd phase of the Third Financial Sector Program, comes with a term of 24 years, including a grace period of 8 years, and an annual interest rate of 1% during the grace period, rising to 1.5% for the balance of the term. The State Bank of Vietnam is the executing agency for the program. ADB has provided ongoing support through a series of sector programs beginning in 1996, with the previous focus on the commercial bank, leasing and insurance industries. Vietnam still has one of the smallest bond markets in the region, with a total of $15 billion in bonds outstanding by the end of Sept, and $14 billion of which are government bonds. (www.adb.org.vn [1] Nov 29, VnEconomy Dec 1)
