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Credit policy reduces poverty

Update: September, 08/2014 - 09:21

Bui Sy Loi, deputy chairman of the National Assembly's Social Affairs Committee, revealed the impact of preferential credit policies to Thoi bao Kinh te Viet Nam (Vietnam Economic Times) newspaper.

What do you think of the results of poverty reduction policies from 2005 to 2012?

The National Assembly's supervision results showed that the preferential credit policy was a shining point among the six big policies for poverty reduction during the period 2005 to 2012. About 10 million households were directly provided with preferential loans bearing low interest rates. As a result, a total of 2.4 million households have escaped from poverty.

Households in the country's 62 poorest districts who were enrolled in poverty reduction programmes, including the preferential credit programme, were provided with loans totalling more than VND4.6 trillion (US$209 million).

The social policy bank said that the overdue debt rate of loans for the poor was below one per cent. This means poor households, including farmers and ethnic minorities, have strived to be productive and to settle their debts. Loan allocation was focused mainly on areas with a high poverty rate such as the Northwest, the Central Highlands and Cuu Long (Mekong) Delta regions.

It is obviously that the wide implementation of preferential credit policies for poor households has met the big demand of the poor.

Why do you say that preferential credit policy for the poor was a shining point?

Direct credit support for the poor was a good policy because we have built a close connection between the State and the poor, or between the social policy bank, organisations and the poor. Loans have been provided to the poor through organisations or unions. All poor households or those facing difficulties in raising capital have had access to the credit source.

However, we must review the direct credit policy for the poor because it was one of important measures to implement the hunger elimination and poverty reduction programme in the country. New lessons will be learned through the policy evaluation, which aims to create more concentrated sources for achieving the targets of the hunger elimination and poverty reduction programmes following the criteria of multi-dimensional poverty. Loans will be provided under flexible terms to ensure enough capital for the poor in developing production. Loans must aim to help the poor to prove the strength of their inner resources, to ensure sustainable hunger elimination and poverty reduction and prevent poor and nearly poor households from falling into poverty again.

What future measures will be carried out to further spread the results of the preferential credit policy for the poor?

The policy has been implemented equally and widely in localities. For me, it is necessary to eradicate multi-dimensional poverty – poverty in food and provisions, education and health, and other cultural and social fields, as well as material and spiritual poverty – to ensure sustainable poverty reduction.

Poverty reduction activities should be implemented comprehensively and drastically with capital sources focusing on poverty cores.

We should focus resources on projects and targets which are labour-intensive and have high economic impact. Resource use plans should handle problems relating to the link between production and distribution or the shift from self-sufficient to surplus production.

Poverty reduction was unsustainable among ethnic minorities in remote and mountainous areas because these areas are self-sufficient and are producing goods even without consumption. Reality showed that we must have enough skilled human resources at the local level that could organise and provide instruction and guidance on sustainable production for the poor. We must handle the problem by finding a way to train human resources that meets the demands of poverty reduction. This will be one of the important factors in successfully achieving targets of sustainable poverty reduction in the future. — VNS

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