Interest waiver expected to benefit 112,024 in 20 dzongkhags
The announcement of the second phase of the Covid-19 relief measures by the prime minister on June 27 on His Majesty’s command came as a huge relief to many as the first phase of the relief measures end on June 30.
The Druk Gyalpo’s Relief Kidu has already benefited about 23,000 people with the granting of Nu 700 million (M). The relief kidu will continue from July until September 2020.
The only difference is that the amounts have been revised to Nu 10,000 from Nu 12,000 and Nu 7,000 from Nu 8,000 per month in anticipation of rising number of applicants.
The Prime Minister’s Office (PMO) encourages kidu recipients to actively seek employment opportunities through various government and private led initiatives.
Through a televised address to the nation, Prime Minister Dr Lotay Tshering said that it was imperative to acknowledge the support of many business entities that have continued to employ and pay the salaries and wages of their staff despite the setbacks.
“There are also many people who have been affected but chose not to avail themselves of the Relief Kidu by exploring other livelihood options. Such support truly reflects the solidarity and unity of our people to make their share of contribution to the country,” he said.
As part of the Druk Gyalpo’s support for interest payment, the prime minister announced that a full (100 percent) interest waiver would be granted for another three months from July to September 2020 across the board. The rate of interest waiver will be reduced by 50 percent from October 2020 to March 2021.
The interest waiver is expected to benefit 112,024 individuals across the 20 dzongkhags with personal and business loan accounts including those accounts listed as non-performing loan (NPL).
The cost of the interest payment for the period of nine months (100 percent waiver from July to September and 50 percent waiver from October 2020 to March 2021) is estimated at Nu 7.5 billion (B) and will be fully granted from the National Resilience Fund.
Finance Minister Namgay Tshering clarified that borrowers who repay their loans regularly and fully during the deferment period will be offered one percent interest rate reduction during the deferment period.
He said that the interest rate reduction for regular interest payers would be adjusted against the borrower’s outstanding balance.
For loans that are fully repaid during the deferment period, the financial institutions will refund the interest differential, according to the government. The prime minister in his address said that the monetary measures would ease debt pressure through the deferment of loans for one year without penal interest.
Financial institutions will also provide soft loans at a highly concessional interest rate of 5 percent for businesses.
Another feature of the relief measure is that the National CSI Bank will provide micro loans up to Nu 500,000 for agriculture activities at the rate of 2 percent and soft loans to cottage and small industries at 4 percent interest rates for another 12 months.
The prime minister announced that the government would also continue to implement fiscal measures to boost domestic demand, increase economic activities, generate employment and ensure stability and growth.
This will be done mainly by front-loading capital investments. To support this, procurement guidelines will be simplified including preferential treatment for local goods.
“To ease cash flow, targeted tax deferments and rental waivers will also be provided. Support to ensure the country has sufficient stock of essentials will also continue,” the prime minister said.
With the implementation of these measures, the prime minister said that the government was optimistic that the private sector would continue to play an active role in the economy to provide necessary goods, services and jobs to tide over the period.
On April 10, His Majesty The King had highlighted the need to protect the health and lives of the people in our country from the risks posed by global spread of the Novel Coronavirus, during the address to the nation.
His Majesty also emphasised on the need to build resilience, confidence and security of our people and businesses, as we face unprecedented economic difficulties this pandemic.
A National Resilience Fund of Nu 30 billion was established to support the Comprehensive National Response to the Challenges of the COVID-19 Pandemic.
The prime minister said that Bhutan had been fortunate, thus far, to have successfully prevented any local transmission of the novel coronavirus.
“The immediate grant of the Royal Kidu for affected individuals, and interest waiver and other government interventions have alleviated the economic difficulties and uncertainties faced by the people and businesses,” he said.
Lyonchhen Dr Lotay Tshering said that in view of the ongoing difficulties, His Majesty the King has commanded that in these extraordinary circumstances, the State must rise above all other considerations and continue to provide substantive, timely and inclusive support to sustain public confidence and build resilience in these challenging times.