Vietnam halves interest rate for loan subsidy

HANOI, Oct 31 - Vietnam said it would extend its interest rate subsidy scheme for businesses until the end of 2010 to sustain the country's economic recovery but it would halve the size of the subsidy.

The scheme will now only cover 2 percentage points of the interest rates on new loans to businesses eligible to receive help from the government's economic stimulus package, down from 4 percentage points.

The subsidy programme will end on Dec. 31, 2010, the government said in a report posted on the central bank's web site (www.sbv.gov.vn) and seen on Saturday.

The central bank said banks had lent 413.2 trillion dong ($23 billion) as of the end of October in soft loans under the scheme, which started earlier this year.

Vietnam's economy grew 5.76 percent in the third quarter from a year earlier, accelerating from growth of 4.46 percent in the second quarter and 3.14 percent in the first.

Hanoi has forecast GDP growth this year of 5.2 percent and is projecting 6.5 percent for 2010.