That our financial institutions (FIs) are mulling to provide loan deferment from six months to a year to borrowers facing genuine financial difficulties comes as a huge relief to the thousands of borrowers across various sectors. The current loan deferment period ends on June 30. Many in the private sector including small businesses are worried.

Notwithstanding interventions through fiscal and monetary policies since the Covid-19 pandemic, the private sector, much of it, is yet to recover. This could be attributed to the slowdown in the economy. Even with a positive growth trend, the impact is not felt on the ground. If the private sector is expected to drive the economy, those in the sector say except for the mining and the ferro silicon industries, the rest are struggling including from the burden of repaying loans.

At a time when the economy is still in the expectation mode of bouncing back, the financial institution could lend a helping hand to its clients, who like they said, are in genuine need. The sectors being considered are many, an acknowledgement of the problems. The conditions are clear and assessment stringent.

Even if,  like a banker said, factors such as borrowers’ income, occupancy rate (hotel), and overall business performance are considered, there would be hundreds if not thousands who would request deferment. Who gets or not will depend on the conditions set, but the banks surely should come to the rescue of their clients.

The tourism industry has bounced back with tourist arrivals in the first three months nearly doubling last spring’s figure. The government announced a revenue of USD 13 million. Allied sectors like the hotel industry are still struggling. Steep undercutting to the pre- pandemic level for dollar-paying tourists and  absorbing the daily sustainable fee of Nu 1,200 in the package has led to the increased number, but the revenue has not trickled down to the hotel business.  Everybody owes the banks and they compromise to give in to tour agents who they depend on for guests. Occupancy rate as of now is a mere 20 percent even though many are selling cheap.

Contractors, big and small are saying there is no work because there are no investments. Retail businesses often become the joke as they bask in the sun waiting for customers. Mi Ra Mindu (there are no people) is the common reason for businesses shutting or moving away.

At the moment, our banks, if they could help  borrowers in need, would not be “a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain.”

Deferring loan payment alone, even for a year, however, is a short term solution. What is needed is investments to spur economic activities that in turn will create employment.