Extending relief measures to be decided this week

MB Subba

Businesses and individuals affected by the Covid-19 pandemic are anxious about what will happen after the loan deferment and interest waivers expire on June 30.

In view of the concern, the government is expected to announce programmes in continuation of the relief fiscal and monetary measures with changes. The government is expected to announce the details of the programmes in the coming week.

Dr Lotay Tshering at the meet the press yesterday said that the government and stakeholders were working on the way forward on the issue. “To be precise, work on fiscal measures is almost done and we will announce towards the end of the coming week,” he said.

The monetary and fiscal measures announced earlier in April were aimed at providing short-term relief to sectors facing financial distress in addition to assisting businesses.

President of Financial Institutions (FI) Association of Bhutan (FIAB), Karma, who coordinated the recommendations on part of FIs, was not available for comment. But chief executive officer of a bank said that details had been worked out and submitted to relevant authorities and the final decision was awaited.

It was learnt that banks have recommended for stopping the interest waivers. But financial institutions are said to be in favour of extending deferment of equated monthly instalment (EMI) by another three months.

Non-Performing Loans (NPL) is expected to worsen of extension of EMI deferment is not extended further.

FIs say that the interest waiver is not sustainable and that the government should resort to other measures. Banks are concerned about the implication of interest waivers on the economy.

In April, financial institutions and other financial service providers waived a total interest of Nu 1,251.93 million (M), which is borne on a 50/50 basis between the government and the lenders, according to the Royal Monetary Authority (RMA). The central bank is yet to announce the amount of waivers for May and June.

The biggest beneficiary was the housing sector that received about 25 percent (Nu 314.9M) of the total waiver. The interest waivers were provided on the command of His Majesty The King for three months.

Financial institutions made available short-term working capital loans to industries to import raw materials at the rate of 7.02 percent. The gestation period is until June 30.

The hotels and tour companies were also given access to loans at 5 percent as working capital.

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