Moratorium for borrowers: international overview by Mintos (updated)

28.05.2020

mintosblog

All around the world, the COVID-19 pandemic is changing the dynamics of human lives. These changes are having an impact on the lives of individuals and the survival of businesses, and governments are stepping in to reduce the negative effects of the global economic downturn. 

Countries are developing new policies and adjusting the existing ones to guard their citizens’ different social and economic positions. This evidently includes financial service providers. Governmental acts of emergency measures aim to impose or recommend moratoriums on loan payments to contribute to the financial stability that’s challenged by the pandemic.

Mintos is monitoring updates of acts on emergency measures on a daily basis. We’re following announcements on new laws or recommendations that regulate borrowers’ affairs in all countries where lending companies on Mintos have their business operations.

Update 28 May 2020: The current state of restrictions in the lending companies’ related markets 

We’re sharing an update regarding the state of the COVID-19 related restrictions in countries of lending companies on Mintos in May 2020. Changes are updated individually for each country. Please note that changes in these measures don’t affect the status of the imposed moratoriums unless noted otherwise, as moratoriums are introduced for a defined period of time and regardless of the status of physical restrictions. Easing or prolonging restrictions mostly affects the borrowers’ access to the lending companies’ physical offices, as well as their ability to return to their workplace and earn the income needed to repay their loans.


The moratorium glossary

Before we go into country-related details, here are some of the basic terms we will use in this overview. 

Moratorium means a borrower is legally authorized to suspend, postpone, or reduce payments (principal, interest, or both) for a limited period of time. This action affects the whole repayment schedule and may lead to increased payments once the moratorium period or loan extension ends. National moratoriums can be ordered by the government, but in general terms, moratoriums can also be imposed by the national central bank and other regulatory authorities.

The moratorium as a payment deferral measure can be reflected as a provided grace period for the loan payments, as credit holidays, or as a loan payment extension.

Grace period is a set number of days after the due date during which payment may be made by the borrower without penalty.

Loan extension or prolongation means the repayment schedule for a loan is extended for the agreed period. Sometimes the borrower can be charged a fee when the loan is extended.

Credit holidays are used in the same way as a moratorium. It means payments are paused for a certain period of time. The decision whether interest will continue to accrue over the credit holidays is at the discretion of the regulatory authority. 


To provide a better overview, we will use a moratorium status grading system: A – moratorium as a legal obligation, B – moratorium as an implicit measure, and C – no moratorium. 

A – Imposed moratorium 

An imposed moratorium comes as a legal obligation introduced on the national level. It is mandatory for all credit institutions unless otherwise stated. 

In its moderate and more common form, an imposed moratorium can be applied to the majority or to segments of financial players and to different loan products. It can be applied by credit institutions when their borrowers ask to delay payments. Based on the national central bank’s decisions or recommendations, the moratorium can be in force for all loan products, or only for certain products or terms (e.g. only for mortgage loans, only for fees or penalties, etc), or it can be related only to banks. 

B – Implicit moratorium 

An implicit moratorium is a type of a payment deferral for borrowers arising from the recommendations by the national central banks or similar regulatory authorities. While it is not legally binding, implicit moratorium can be seen as a highly-suggested measure that financial institutions operating in the related market are expected to follow (credit institution itself, institutional agency, professional association, etc.). In absence of the government’s recommendation, financial institutions can offer their customers different relief measures for credit payments, on their own initiative.

C – No moratorium

This status means that no moratorium has been imposed.


Moratorium status across Mintos geographies

The Mintos Risk team is following new developments in our market countries. We will update this article on a weekly basis, or in the case of important changes, as soon as we get the information.

For easier navigation, you can check the current status of each country directly by clicking on it in the table below.

CountryMoratorium status*Moratorium's short description for the summary table
AlbaniaAImposed moratorium for all financial institutions
ArmeniaBNo moratorium, credit holidays as banks' initiative
BelarusBNo moratorium, credit holidays as banks' initiative
Bosnia and HerzegovinaAThree months loan repayment moratorium for banks
BotswanaBNo moratorium, credit holidays as banks' initiative
BulgariaAImposed moratorium for all financial institutions
ColombiaCNo moratorium
CzechiaAImposed moratorium for all financial institutions
DenmarkBNo moratorium, only loan fees paused
EstoniaCNo moratorium
FinlandBNo moratorium, credit holidays as banks' initiative
GeorgiaBNo moratorium, credit holidays as banks' initiative
IndonesiaBNo moratorium, but banks are lowering lending rates
KazakhstanAImposed moratorium for all financial institutions
KenyaBNo moratorium, credit holidays as banks' initiative
KosovoAImposed moratorium for all financial institutions
LatviaBVoluntary moratorium, all credit institutions can introduce moratorium on their own initiative.
LithuaniaAImposed moratorium for banks, for mortgage loans
MexicoBNo moratorium, credit holidays as banks' initiative
MoldovaAThe Central Bank's recommendation for credit holidays
NamibiaAImposed moratorium for all financial institutions
North MacedoniaAImposed moratorium for all financial institutions
PhilippinesAImposed moratorium for all financial institutions
PolandBNo moratorium, credit holidays as banks' initiative
RomaniaAImposed moratorium for all financial institutions
RussiaAImposed moratorium for all financial institutions
South AfricaBNo moratorium, credit holidays as banks' initiative
SpainAImposed moratorium for all financial institutions
TurkeyBNo moratorium, the government's recommendation for payment deferrals
UkraineBNo moratorium, penalties for late payments eliminated, credit holidays recommendation
United KingdomAMoratorium for car and payday loans, mandatory for financial institutions on customer’s request
VietnamBNo moratorium, credit holidays as banks' initiative
ZambiaCNo moratorium

*In some countries, a type of moratorium B that is recommended by the government is in practice similar to an imposed moratorium A. For countries in the European Union, this is explained in the European Banking Authority’s “Guidelines on legislative and non-legislative moratoria on loan repayments applied in the light of the COVID-19 crisis” from April 2020.

Albania (Republic of Albania)

Moratorium status:

Overview

Albania, like most Balkan countries, is currently in total lockdown, with a curfew limiting the movement of citizens. 

The central bank and the government of Albania have currently imposed a 3-month moratorium that applies to all financial institutions. Borrowers can apply for the payment deferral with proof of a financial difficulty that is reviewed by the financial institution. 

(Update from 28 May, 2020)

Restrictions are eased and social life is going back to normal while the remaining restrictions are mostly related to travel. The opening of borders and ending of imposed quarantine is supposed to be announced for the beginning of June.

Armenia (Republic of Armenia)

Moratorium status: B

Overview

The Armenian government has introduced limitations of movement. Citizens who lost their jobs due to the pandemic will be paid a one-time support equivalent to a monthly salary by the government. Regulators in Armenia are talking about credit holidays, but no official moratorium has been imposed. The regulator is suggesting borrowers and loan originators or banks to have conversations regarding a possible restructuring of the loan payments. The regulator is calling for sensitivity toward the highly-affected HoReCa sector employees. 

On April 1, 2020, the Armenian government announced a special help program for SME companies and the agricultural sector. The government will fund loans with 0% interest rate over the next three years. 

(Update from 28 May, 2020)

The state of emergency is prolonged until 13 June 2020.


Belarus (Republic of Belarus)

Moratorium status: B

Overview

Belarus currently does not have a national lockdown. All borders are still open. Nevertheless, in March 2020 the National Bank of the Republic of Belarus advised banks to introduce credit holidays, and some are already giving payment deferrals to their clients. Among the possible measures is a moratorium on the application of penalties for late contractual obligations for the period of pandemic plus an additional three months. These measures also include a deferral of credit and leasing payments, as well as a deferral of VAT payments. 

(Update from 28 May, 2020)

No changes to previously introduced measures.

Bosnia and Herzegovina

Moratorium status: A

Overview

Bosnia and Herzegovina is in a complete lockdown. In the country, banks are introducing a moratorium on loan repayment for a period of three months, and this can also be applied to the non-bank lenders. Borrowers can request a moratorium if they are directly affected by the pandemic, for example, if they lost their job or their family income has been reduced due to other pandemic-related reasons. After the first three months, the Banking Agency of Bosnia and Herzegovina recommends individual agreements between banks and clients, if there is a need for further payment extensions. Besides the moratorium, credit reliefs for businesses are being introduced to provide liquidity for the country’s economy. 

(Update from 28 May, 2020)

The government has eased the measures and terminated strict curfew. Kindergartens, cafes, and restaurants are open, with regulated requirements for behavior in public places (institutions, cafes, etc).

Botswana (Republic of Botswana)

Moratorium status: B

Overview

Although the number of registered COVID-19 cases is not high, Botswana is in lockdown and borders are closed. As this will have an impact on the tourism industry, significant solvency problems for those employed in tourism are expected. Commercial banks have introduced three-month credit holidays, which can be extended to six months for highly affected sectors. Regular payment obligations will be restructured and rescheduled to offer relief, and borrowers will be subject to individual policies. The government has also promised short-term financial help to companies that may be affected by the pandemic.

(Update from 28 May, 2020)

On 21 May, the government announced the end of the imposed social distancing, ending the “Phase three” of the lockdown. From 12 June 2020, the domestic flights and the railway freight transportation will continue operating. Train transportation remains closed for passengers.

Bulgaria (Republic of Bulgaria)

Moratorium status: A

Overview

Between March 2020, when the Bulgarian government declared a state of emergency, and the beginning of April, more than 40 000 people have registered with labour offices as unemployed. People who have lost their jobs due to the pandemic will get help from the state. Bulgaria’s Central Bank unveiled a set of measures worth BGN 9.3 billion (€ 4.7 billion) that are intended for maintenance of the banking system’s stability amid the pandemic. 

On April 3, the Bulgarian National Bank (BNB) asked local commercial banks to propose a set of rules for a moratorium that would defer loan repayments for a certain period of time to mitigate the impact of the coronavirus crisis on borrowers. The BNB is following the guidelines on moratoriums as proposed by the European Banking Authority (EBA). According to the Association for Responsible Non-Bank Lending, quick loans have been excluded from the moratorium in Bulgaria, as this product is excluded from the EBA’s guidelines, and it’s not offered by the commercial banks in Bulgaria.

(Update from 30 April, 2020)

As of 10 April, a moratorium is approved and applicable to commercial banks. Borrowers must meet some eligibility criteria, e.g. they are experiencing repayment difficulties due to the COVID-19 pandemic, they have regularly serviced their credit obligations until 1 March 2020, etc. Requests for reliefs need to be submitted by 22 June 2020. The credit obligations may be deferred for up to 6 months (deferral of principal or principal and interest), and not later than 31 December 2020.

(Update from May 8, 2020)

As of April 10, commercial banks in Bulgaria allow borrowers to delay payments on their consumer, business and mortgage loans by six months. According to the National Bank of Bulgaria, bank moratorium will be valid until the end of the year. In addition to the National Bank of Bulgaria’s decision, the government has passed a law that increases the scope of lending companies affected by the payment moratorium and includes non-banking lenders into the moratorium obligations. Hence, borrowers of non-banking lenders can also apply for loan payment delays of up to six months. Delayed interest and penalties will not be charged for the time while the payments are delayed.

(Update from May 28, 2020)

In mid-May, a national emergency was lifted and the state of an epidemic emergency was proclaimed. With quarantine for travelers and closed schools, daycare centers, shopping malls, and indoor cafes/restaurants, the restrictions in the country are currently remaining strong.

Colombia (Republic of Colombia)

Moratorium status: C

Overview

Colombia is in lockdown, with limits to allowed movement. Earlier in March, the Colombian government announced a package of economic measures to mitigate the effects on the tourism and aviation sectors amid the pandemic crisis. Columbia hasn’t introduced any moratorium for banks or non-bank lenders yet, except for the policy responses that include deferral of corporate and VAT taxes for the tourism and aviation sectors. The government has also enabled a financial instrument of direct lending for SME in the most affected industries. Furthermore, the government decided to temporarily reduce some of the import tariffs, including for the health and aviation sectors. Some banks are individually introducing initiatives to help their borrowers, such as freezing of loan repayments, or business loans to help companies struggling with liquidity.  

(Update from 28 May, 2020)

The country has extended the quarantine until 31 May (from 25 May). While citizens need to have a justified cause to move out of their homes, some businesses are allowed to slowly reopen for basic services. According to current information, Bogota may extend the quarantine measures for three months.

Czechia (The Czech Republic)

Moratorium status: A

Overview

The Moratorium on the repayment of loans and mortgages in the Czech Republic proposed on April 2, 2020, is binding for all banks and non-bank lenders. Both private and business debtors will be able to suspend their repayments for three or six months, based on their choice. 

The debtor will need to notify the creditor about their intention to defer repayment, and provide a  statement about the negative economic impact of the pandemic on the household income or on the business liquidity. Besides the statement of impact, debtors will not have to provide any other proofs regarding this subject. Industry associations are suggesting the government should waive advance payments of payroll taxes, including social insurance paid by both employers and employees.

(Update from 28 May, 2020)

The state of emergency ended on 17 May 2020, as life in the country is getting back to normal with defined precautionary measures for citizens in public spaces.

Denmark (The Kingdom of Denmark)

Moratorium status: B

Overview

Danish borders and schools are closed due to the pandemic, and the government of Denmark is supporting local businesses in order to protect the workforce from unemployment. The government is supporting affected companies by covering  75% of the wages. The National Bank of Denmark will relieve some additional costs from the borrowers’ payments, such as certain fees, while interest and principal payment amount remain the same.

In March 2020, the Danish Parliament passed legislation that enables companies affected by the COVID-19 crisis to defer the payment of tax and VAT for a total of DKK 165 billion (€ 22 billion). Highly-affected small companies and individual entrepreneurs will be supported with aid packages that will include temporary compensation for fixed costs.

(Update from 28 May, 2020)

Social life in the country has resumed with defined precautionary measures, while bigger gatherings are prohibited until September.

Estonia (Republic of Estonia)

Moratorium status: C

Overview

In order to curb the immediate impact of the COVID-19 pandemic on the economy and society, the Estonian government will support the country’s economy with at least € 2 billion. The package includes a tax debt deferral of 18 months, a temporary suspension of second pillar pension scheme payments, as well as partial compensation for the direct costs of the cancelled events. On March 27, Estonia signed a 15-year loan agreement of € 750 million with The Nordic Investment Bank (NIB). The Estonian Hotel and Restaurant Association (EHRL) suggested a tax moratorium for the tourism industry and a zero VAT rate for accommodation and catering services until the end of 2021.

(Update from 28 May, 2020)

The country will be further easing the restrictions for non-essential businesses, culture and outdoor sports events from 1 June 2020, as long as hygiene and number of people per square meter rules are followed. 

Finland (Republic of Finland)

Moratorium status: B

Overview

Finland closed its borders, and the country is in lockdown. The total stimulus for the support to businesses and individuals during the pandemic-caused downturn in Finland amounts to € 15 billion (6% of the GDP). Some retail banks in Finland are now working with customers to modify their loans. Payments for mortgage borrowers who are affected by the pandemic could be suspended for up to one year, without additional service fees. Customers would still be liable to pay the interest on their mortgage. According to the country’s Ministry of Justice, the government is preparing a proposal to decrease the interest rate cap for short-term loans from current 20% to 10%. Direct advertising of instant loan offers is prohibited until the end of the year. 

(Update from 30 April, 2020)

The Finish government is considering a proposition to cap the interest rate, and the proposition has moved to the next stage of discussion. Still, no official legal response has been introduced yet. 

(Update from 28 May, 2020)

From mid-May, a controlled opening of preschools and elementary schools will begin, while the government approves only business-related and essential trips within the Schengen area. Starting 1 June, restaurants, theaters, cinemas, bars, and other public places will be allowed to gradually reopen, with limitations to hosting a maximum of 50 people.

Georgia (Republic of Georgia)

Moratorium status: B

Overview

Georgian society is in lockdown, with closed borders and schools, and limitation to free movement. 

One of the biggest Georgian banks gave credit holidays for its borrowers, and some credit institutions are following the example. The loan repayment rules for individuals have been relaxed, with more space for banks to do the risk assessment. Around 600 businesses who are renting their spaces from the city of Tbilisi received a lease payment extension of three months. Georgian government is keeping an eye on the inflation due to the depreciation of the local currency Georgian lari (GEL).

(Update from 28 May, 2020)

The government didn’t prolong the state of emergency beyond the set date, and citizens are allowed to move by vehicles in and between the country’s cities. Certain restrictions will still remain in power for the upcoming months.

Indonesia (Republic of Indonesia)

Moratorium status: B

Overview

In February 2020, the Indonesian government established a USD 725 million (€ 667 million) package to support tourism, airlines, and real estate industries. In March 2020, Indonesia announced a further USD 8.1 billion stimulus package (€ 7.5 billion and 0.8% of the GDP) that includes support for income tax exemptions for workers in manufacturing and corporate tax reductions for manufacturing companies. 

The Central Bank of Indonesia proposed to banks to trim their lending rates in order to pare down the effects of the pandemic on the economy. Banks are advised not to undertake debt collection during the pandemic, but to focus on helping their customers with restructuring of the existing debts and grants of new subsidised loans. A deferral of installment payments is advised in order to protect the community’s purchasing power during the pandemic.

When it comes to non-fiscal response, the national regulator suggested relaxed rules for loan restructuring for small and medium-sized companies, simplification of the certification processes for exporters, and lighter requirements for the import of raw materials. 

The Bank of Indonesia cut its benchmark interest rate by 25 basis points and lowered its deposit facility rate to 3.75% and lending facility rate to 5.25%.  

(Update from 28 May, 2020)

No changes to previously introduced measures.

Kazakhstan (Republic of Kazakhstan)

Moratorium status: A

Overview

Kazakhstan has put in place limitations to its public life due to the COVID-19 pandemic. On March 2020, the country’s authorities announced a major anti-crisis package of KZT 4.4 trillion (€ 9.2 billion or 6% of the GDP). This package includes regulated prices for essential goods and targeted assistance, cash payments to the unemployed, a lower VAT rate for food, as well as additional spending to strengthen the health sector and support employment and business. Subsidized lending will be provided under the state program “Economy of Simple Things”, in the amount of KZT 1 trillion (€ 2.1 billion), along with actions to help small and medium-sized enterprises finance their working capital with KZT 600 billion (€ 1.3 billion). An additional KZT 1 trillion (€ 2.1 billion) will be allocated to support employment under an “Employment Roadmap” program. 

The government announced that the borrowers’ payments of principal and interest on loans should be temporarily suspended and that lending companies and banks should not charge any penalties for late repayments. For payment deferral requests by highly affected borrowers, suspension is obligatory for the credit institution. For the rest of the borrowers, the institutions need to consider credit holidays. National regulator will undertake close monitoring of operations and compliances to moratorium among pawnshops, online lenders and microfinance lenders. 

In the beginning of April, the president of Kazakhstan promised additional measures to support the businesses and individuals during the pandemic. One of these measures is giving free medical care to citizens without insurance.

(Update from 28 May, 2020)

No changes to previously introduced measures in large; the country is opening airports for domestic flights.

Kenya (Republic of Kenya)

Moratorium status: B

Overview

To maintain cash flow for businesses during the COVID-19 pandemic, the Kenyan government has reserved funds for expediting payments for existing obligations. At the same time, the government is reassessing the budget deficit target for FY 2019/20. The Central Bank of Kenya has encouraged banks to introduce flexibility for borrowers’ loan terms. The institution also advocates for the waiving or reduction of charges on mobile money transactions to disincentivize the use of cash. The banking sector regulator has also cut interest rates by one percentage point, to further ease loan repayments. 

Stanbic Bank Kenya has offered a short-term repayment plan with a three month loan holiday for SME and other customers, as a measure against the negative impact of the pandemic. When it comes to alternative lending companies, no special measure has been implemented yet.

(Update from 28 May, 2020)

No changes to previously introduced measures.

Kosovo (The Republic of Kosovo)

Moratorium status: A

Overview

Although affected by the pandemic, Kosovo is not in lockdown. The Central Bank of Kosovo (CBK) and the Kosovo Banking Association have suspended the payment of loan instalments for businesses and individuals for the period from March 16 to April 30. The relief measures guaranteed by imposed moratoriums can be requested to the lending institution for the period of three months, without extra charges or additional fees. Depending on the situation, the suspension could be extended. The emergency fiscal package promises € 41 million for the private sector support, and also short-term support for individuals who lose jobs due to pandemic. Key spending and tax measures also include deferrals for corporate income and personal income taxes and VAT allocation, deferral of public utilities payments until the end of April 2020, and more.

(Update from 28 May, 2020)

As the number of infections has dropped, the country eased imposed measures while still keeping some of them in place – mostly related to travel. 

Latvia (Republic of Latvia)

Moratorium status: B

Overview

Latvia is in a semi-lockdown, with borders closed, but public spaces are still open for people in pairs. Commercial banks are practicing loan holidays, and giving an opportunity to their clients to defer the upcoming payments for the period of up to 12 months. Consumer protection centers are being proactive when it comes to alternative lending companies, advising them on flexibility and understanding for affected borrowers. In that sense, the Alternative Banking Association has agreed to observe borrowers’ cases individually, while practicing credit holidays. 

The Latvian government announced a national support package of approximately € 1 billion (an equivalent of close to 3% of the GDP) to support businesses and employees, including tax holidays and paid sick leave. The state’s support program will cover up to 75% of employees’ salaries, up to a maximum of € 700 per month. All business subjects affected by the pandemic-caused crisis will be able to apply for tax payment extensions of up to three years. 

(Update from 30 April, 2020)

Finance Latvia Association has invited institutions to join a voluntary moratorium, with predefined rules. This means moratorium measures can be introduced by credit institutions or their subsidiaries, per their own decision. These measures define that individuals can defer payments on the principal amount of a mortgage loan for up to 12 months, and payments on the principal amount of leasing and consumer loans can be postponed for up to 6 months.

(Update from 28 May, 2020)

The country has eased measures with suggested precautionary behavior for citizens in public spaces. Together with Estonia and Lithuania, the country has introduced the “Baltic bubble”, allowing citizens to travel between the 3 countries without requirements to quarantine or self-isolate.

Lithuania (Republic of Lithuania)

Moratorium status: A

Overview

Lithuania is in lockdown, with closed borders, schools, and public spaces. The Lithuanian government endorsed an economic stimulus package of € 2.5 billion (5% of the GDP) to help the country’s economy amid the pandemic-caused downturn. The Bank of Lithuania is encouraging lenders to be flexible and to negotiate individual loan terms with borrowers, within the existing regulatory framework.

The country will charge no interest on delayed payments and has paused penalty surcharges. Lithuania has also extended deferrals to payments of local and property tax and utility costs with the aim of avoiding cost and liquidity problems for companies. 

For borrowers who lose one-third of their income, mortgage loans can be deferred for a period of three to six months. Affected businesses will be able to defer payment of taxes without any interest. The government also expanded the guarantee schemes, including guarantees for agricultural and SME loans by € 1.3 billion, while also increasing the borrowing limit by € 5 billion.

(Update from 30 April, 2020)

Financial and credit institutions united in the Association of Lithuanian Banks signed an agreement that introduces a moratorium for business loans, for up to 6 months. The moratorium will be in effect until July, 2020.

(Update from 28 May, 2020)

The country has been easing the lockdown and restriction measures for citizens and businesses gradually since late April and over the month of May. Together with Estonia and Latvia, the country has formed a “Baltic bubble” that allows citizens of the three Baltic countries to travel within the region without requirements of quarantine and social isolation.

Mexico (United Mexican States)

Moratorium status: B

Overview

Mexican authorities have ordered a loosely defined lockdown, closing all but essential services such as pharmacies and supermarkets, until April 30. (Extended to May 30.)

Main banks in Mexico are adjusting their policies to the implicit moratorium measures, offering deferral of principal and interest payments for loans. Some of them offer moratoriums for up to four months, such as grace period on interest and capital to those who have a mortgage, auto, and personal loans, payroll credit and credit cards, including SMEs with simple loans. Some banks also look to support health-related expenses.

The Mexican government has a view on fintech as a tool of support for financial inclusion. During the pandemic, fintech initiatives are being launched or put to the front to alleviate the liquidity problems of entrepreneurs. Mexican fintech startup “Credijusto” raised USD 100 million (€ 92 million) to extend the loan offer for small and medium businesses. 

Mexico’s sovereign rating was cut to BBB from BBB+ by the credit rating agency S&P in anticipation of an economic hit from the COVID-19 pandemic and a plunge in oil prices, causing additional pressure on the government.

(Update from 28 May, 2020)

Through May 2020, the government imposed lockdown has banned all but essential services from operating. The country’s car industry, construction, and mining sectors were allowed to restart operations from 18 May. Mexico City officials have announced the city’s businesses will be allowed to gradually reopen from 1 June 2020.

Moldova (Republic of Moldova)

Moratorium status: A

Overview

In Moldova, the state of emergency is announced to last until the mid-May, 2020.

The National Bank of Moldova has advised banks and alternative lending companies to offer a possibility of loan restructuring. This is not a legal obligation, but a strong recommendation. Each borrower request will be considered separately, for all businesses and private persons. The Government of Moldova is working on a few measures regarding the country’s businesses and preservation of the economy. Companies with reduced activity during the emergency period will be reimbursed 60% of taxes on salaries. For companies in the HoReCa sector, the VAT is reduced to 15% from the previous 20%. Income tax for the first quarter of the year will be postponed until the end of May, 2020. The government has also frozen utility payments for the period of emergency, without penalties or disruption of supply.

(Update from 28 May, 2020)

The state of emergency has been prolonged until 30 June 2020. From June, non-essential businesses will be allowed to reopen following prescribed measures regarding hygiene and the number of customers per square meter. International travel is allowed only by means of land transport.

Namibia (Republic of Namibia)

Moratorium status: A

Overview

Namibia’s largest economic centres Erongo and Khomas are in lockdown until April 2020, and all non-essential businesses in the country are closed.

In agreement with the Bankers’ Association of Namibia, the Bank of Namibia introduced measures to assist corporations and SMEs. The measures regarding regulatory and policy relief are made to support the economy and control the impact of the COVID-19 pandemic. The Bank of Namibia suggested a moratorium on loans for banks. Depending on the borrower or the credit institution itself, the moratorium or holiday on loan repayments can be granted to individual and business clients. The credit holidays are valid for both principal and interest payments, and can be in power for a period from 6 to 24 months. The period will be decided based on the difficulties experienced by a specific borrower. 

To help banks on the market, The Bank of Namibia will relax the liquidity measures, reduce the capital conservation buffer to 0% for 24 months, and relax the concentration risk limit and single borrower limit, to allow institutions a wider scope of lending.

(Update from 30 April, 2020)

The lockdown is extended until end of May. The Central bank has cut repo rates from 5.25 to 4.25, an action that is supposed to provide short term relief to borrowers.

(Update from 28 May, 2020)

The country is easing measures, starting with the reopening of schools from 3 June 2020. Over the past month, the Namibian Competition Commission registered numerous price exploitation practices, with an increase in prices of various products ranging from 14% to 1000%.

North Macedonia (Republic of North Macedonia)

Moratorium status: A

Overview

North Macedonia is in lockdown, with various curfews for different segments of citizens. 

The Minister of Finance declared that instalment payments in financial institutions and lending companies will decrease by 70% for the next three months. The newly adopted regulation amendments by the National Bank of North Macedonia allow banks to offer more favorable contract terms including grace period, extension of a loan’s maturity date, lower interest rates, and more favorable loans to close the existing ones with. Additionally, new regulation is changing non-performing loan classification from 90+ to 150+ days. Based on the decision of the National Bank, Ministry of Finance, and Association of Banks of North Macedonia, relieved terms for loans will be offered to all borrowers for all products. In addition, the government has started a zero-interest loan program of € 5 000 to € 30 000 for SMEs, with a grace period of 6 months, with the first payment in 9 months and maturity of two years.

The North Macedonian government passed a € 200 million bill to protect jobs in the country. The government will support individuals who lost their jobs due to the pandemic with 50% of the average net salary, but also private companies that are affected by the COVID-19 crisis.

(Update from 28 May, 2020)

The country has eased restriction measures while keeping some regulations in place when it comes to precautionary behaviors in public spaces, and regarding traveling. From the end of May, bars and restaurants with terraces will be allowed to serve a limited number of customers.

Philippines (Republic of Philippines) 

Moratorium status: A

Overview

The Philippines are under a month-long lockdown, where mass gatherings are prohibited, schools are closed, and all public transportation is suspended. 

The Philippine government will release a P 200 billion (€ 3.6 billion) support package that will assist the most heavily affected individuals and businesses. The government has approved subsidies to families affected by the crisis, by providing financial assistance for two months. 

On March 24, the government directed all financial institutions to provide a minimum mandatory 30-day grace period for their clients, without accruing interest and without penalties or fees for the late payments. As a result, banks and non-banking lenders in the Philippines now offer a 30-day grace period for their qualified credit card holders, but also for the car, mortgage, and personal loan debtors. Banks are also expected to suspend all fees and charges imposed on online banking platforms during the period of the regulatory relief.

(Update from 28 May, 2020)

While the country is seeing new cases in localized clusters, the lockdown measures have been eased with modified enhanced community quarantine for the affected areas. The Tax Bureau has announced that there will be no new extensions for taxpayers after 14 June 2020, regardless of changes to the lockdown measures.

Poland (Republic of Poland)

Moratorium status: B

Overview

Poland is in lockdown, with reduced access to the public life and closed borders. 

Banks are providing their clients with credit holidays, based on an individual evaluation of each case. Credit holidays are not mandatory. The Polish Bank Association representatives recommended extensive assistance for clients of banks in Poland. The advised aid is mainly about deferral of subsequent installment repayments for a period of three months. 

According to the Minister of Finance, the tax on retail sales would be deferred until the end of 2020. In light of the COVID-19 pandemic, a special APR cap was imposed in Poland. The maximum interest part of APR is 9% per annum. The maximum non-interest part of APR can be no more than 15% of the principal, + 6% for each year of the duration of the loan. 

(Update from 28 May, 2020)

The country is gradually lifting restrictions, as non-essential businesses are allowed to reopen: libraries and museums, cafes, beauty salons, and restaurants. The same goes for hotels and shopping centers, which can reopen while following strict hygiene regulations and clearly defined rules, such as a limited number of people per available space. Masks will continue to be obligatory in the public until a COVID-19 vaccine becomes available.

Romania 

Moratorium status: A

Overview

Romania is in a nationwide lockdown since March 25, with strict measures of limitation of movement, especially for the most sensitive groups of citizens. 

In the meantime, the country has introduced a moratorium for loans. Private individuals and businesses have the right to request the deferral of their loan repayments with the supporting evidence of their income statement. The statement needs to show an income decrease of at least 15% compared to the average of the last two months, in order for the moratorium request to be approved. Individuals and businesses are allowed to apply for a payment extension until the end of 2020, without extra cost for extension. The moratorium will be applicable for all loans issued before March 31, 2020, hence the full grace period for Romanian borrowers can be up to 9 months.

(Update from 28 May, 2020)

In mid-May, the country’s state of emergency changed into a state of alert, with less strict measures for its citizens. The period of applying for deferred borrower repayments is extended until 15 June 2020 (previously 15 May 2020).

Russia (Russian Federation)

Moratorium status: A

Overview

Russia introduced limitations to public gatherings, with most of the businesses being closed with imposed, paid collective holidays throughout April 2020. (Update: collective holiday prolonged until 11 May.)

When it comes to payment deferrals and reliefs for borrowers, some commercial banks in Russia introduced 3-month credit holidays for principal and interest amount for people who are infected by the virus or have financial problems due to the virus. 

At the beginning of April, 2020, the government has officially approved a moratorium. Banks will have five days to approve credit holidays requests. In order to get approval, borrowers need to prove that their income has been strongly affected by the virus: with a decrease of at least 30% compared to the average monthly income in 2019. A special interest for the prolongation period could be applied, calculated as two-thirds of the Central Bank’s rate.

The Central Bank of Russia recommended for all bank and non-bank lenders to avoid imposing penalties and fines for people who were infected with COVID-19. The Central Bank also recommended for credits backed by real estate to hold from sale until the end of September, 2020. 

(Update from 28 May, 2020)

Responsibility for ending the collective holidays introduced due to the pandemic was transferred to the city authorities. In Moscow, holidays were prolonged until the end of May 2020, while small businesses are gradually reopening for work. 

South Africa (Republic of South Africa)

Moratorium status: B

Overview

The current lockdown in South Africa is expected to last until April 2020. The lockdown and closure of global borders will significantly affect the country’s economy.

Different institutions and authorities in South Africa have called for banks to defer loan payments for their clients for a period of up to three months. Mortgage lenders are suggested to cut interest rates on mortgages.

Local banks are applying credit holidays for their clients on a case-by-case basis. For example, Nedbank will offer individual solutions to individual clients with pandemic-affected cash-flow problems. These solutions include debt repayment holidays, extension of loan periods, or approval of other credits that will help to manage short-term cash flow problems. Standard Bank will provide debt relief for students and SMEs affected by the COVID-19 pandemic. 

(Update from 28 May, 2020)

No changes to previously introduced measures.

Spain (The Kingdom of Spain)

Moratorium status: A

Overview

Spain is one of the European countries most affected by the COVID-19 pandemic. Current restrictions that are affecting tens of millions of people are in power all through the month of April. (Restrictions are extended to May.)

Spain has introduced a three-month moratorium on mortgage payments for the most vulnerable groups, and an automatic moratorium on rent payments for vulnerable tenants whose landlord is a large public or private housing holder. The moratorium is also introduced on non-mortgage loans and credits for the vulnerable groups. Requests for a moratorium need to be supported with proof of negative impacts due to the COVID-19 pandemic. Individuals who are experiencing a severe decrease in average monthly income due to the pandemic will be offered zero-interest credits in the upcoming period. A moratorium is set for utility bills, guaranteeing the provision of essential services for vulnerable groups.

The Spanish Council of Ministers approved the release of a € 20 billion support package, one half of which will be directed as help for SMEs and self-employed individuals. SMEs with a trading volume of € 6 million or less will be able to defer the payment of tax amounts for up to six months, with no interest penalties during the first three months of deferral. Workers affected by a temporary collective layoff procedure will receive unemployment benefits, with up to 100% for the temporary contract suspensions.

(Update from 28 May, 2020)

The state of emergency has been extended to 7 June 2020, while the country is gradually lifting some of the imposed restrictions already from 11 May. The lifting of lockdown measures will be executed over four phases, as planned by the government.

Turkey (Republic of Turkey)

Moratorium status: B

Overview

The Turkish Banking Association gave a recommendation to banks to support their clients with favorable measures regarding remaining debt repayments. The National Bank said that it will allow restructuring of loans with up to 12 months of additional time for sectors such as tourism, and up to a six-month non-payment period. The loan principal and interest payments for companies whose cash flows have deteriorated will be delayed for a minimum of three months in Turkey, while additional financial support will be provided if necessary. Additionally, they recommend easing the credit access and additional flexibility to all lenders, even when it comes to the issuance of new loans in times when customers can’t repay their debt on time. The nation’s banking regulator doubled the period for the classification of loans as non-performing from 90 to 180 days.

The president of Turkey has unveiled a USD 15.4 billion (€ 14.1 billion) package for help to pandemic-affected businesses in the country.  As one of several measures to help businesses cope with the impacts of pandemic, Turkey is also offering tax relief. The Turkish Central Bank cut its key interest rates by 100 basis points. Among other measures, the package will cover a three-month deferral of loan payments by companies and additional financial support to affected businesses, reduction of VAT on domestic air travel, tax and social security premiums for six months for the most affected industries, and more. 

The government wants to make sure that loan packages for SMEs are promised under favourable and advantageous conditions. Defaulted companies will have a “force majeure” note in their credit registry. The Turkish government will continue minimum wage support for a minimum of three months, and if necessary, additional financial support will be provided.

(Update from 28 May, 2020)

No changes to previously introduced measures. Educational institutions will remain closed until the beginning of the new school year in September 2020.

Ukraine

Moratorium status: B

Overview

The National Bank of Ukraine has recommended to banks a restructuring of the loans for borrowers that are affected by the pandemic. They also announced it is not allowed for lenders to calculate penalties for borrowers that are late with their payments in the period from March 1 to April 30, 2020, which is supported by the country’s parliament. Until the end of May 2020, most of the tax violation penalties won’t be applied. The National Bank of Ukraine advises that credit holidays should be given only to people who were impacted by the pandemic. 

An additional payment will be given to all pensioners with pensions below 5000 UAH (€ 168), and an earlier than planned indexation adjustment of pensions will happen in 2020. The government has introduced a moratorium on penalties and disconnection of consumers who are late on utility payments, and reduced eligibility criteria for household utility subsidies. The Ukranian government has introduced an additional allowance of 150-200% of their salary for active medical professionals exposed to COVID-19 patients. 

(Update from 28 May, 2020)

The state of emergency has been prolonged until 22 June 2020. From 1 June, the country will move into the next mitigation phase, in which bus and railway transportation between the local cities will resume.

The United Kingdom

Moratorium status: A

Overview

According to the United Kingdom’s financial regulator, freezing of loan and credit card payments for up to three months could come into force in the upcoming days. Banks have been ordered to refrain from credit card cancellation until October 2020, to help people go through the financial hardships caused by the pandemic. Borrowers will be given more time to repay their debts. The government has announced a VAT payment deferral for a period of three months. As banks offer their residential mortgage customers payment holidays for up to 90 days, the government says it will support mortgage payments, and cover tenant leases. 

The British government has announced it will pay up to 80% of salaries to employees who are not working due to the pandemic. In earlier statements, the government also announced that they will provide a flexible fund of GBP 330 billion (€ 375 billion) of loan guarantees, for help to businesses affected by the crisis. The Bank of England said that banks must keep on supporting viable businesses with loans even through the pandemic period, in order to help them survive. Payday lenders are decreasing new loans approvals as they tighten their lending rules. At the same time, the government has committed to piloting no-interest loans for low-income borrowers. The government is not accelerating this move, as more vulnerable borrowers need to look for more expensive loans to weather through the times of pandemic.

(Update from 30 April, 2020)

Starting from 27 April, payday loan and car finance customers can request payment freezes. For high-cost, short-term credit, including payday loans, payments can be frozen for one month, with no additional interest charged. A three-month payment freeze is offered for the motor finance, buy-now-pay-later (BNPL), rent-to-own (RTO) and pawnbroking agreements.

(Update from 28 May, 2020)

From mid-May, citizens are allowed to spend their time outdoors for sport and open-air leisure activities but are required to keep distance and limit the number of people involved. The government has invited everyone with the possibility to work from home to continue doing so, while those with a physical place of work are allowed to resume their work activities following strict physical distance and hygiene measures. Starting from 15 June, all non-essential retailers who can ensure safe physical distance will be allowed to open their businesses. 

Vietnam (Socialist Republic of Vietnam)

Moratorium status: B

Overview

The Central Bank of Vietnam has ordered banks in the country to delay, cut or eliminate the interest payments for companies that are facing difficulties due to the COVID-19 pandemic. 

The National Central Bank is instructing credit institutions across the country to cooperate with local authorities in order to resolve difficulties that both business and private borrowers are facing. The helpful measures should include rescheduling of the debt payments and reduction of the loan interest rates, with the focus on the most affected industries like tourism, agriculture, and export. 

Vulnerable households will be offered an interest cut in the amount of 15%, as directed by the Vietnam Bank for Social Policy, starting from April and until the end of this year. The same bank will offer businesses interest-free loans in the period of one year, to help companies with the salaries for workers that will be out of work for three months. 

So far, more than 40 000 people got their debt payment period extended, for a total value of more than VNĐ1.3 trillion (€ 50 million).

(Update from 30 April, 2020)

Many banks have eliminated or reduced fees for transactions via e-banking, encouraging customers to make online payments. Statistics from the National Payment Corporation of Vietnam (NAPAS) show a 76% increase in non-cash payment transactions since the beginning of 2020. Caused by the pandemic, the unemployment rate is the highest in the last five years.

(Update from 28 May, 2020)

As the country has marked more than 30 days without new infections, the government allowed the reopening of all non-essential services, excluding clubs. The country has approved the reopening of sub-border gates and border crossings with China to ease the trade. Vietnam is planning a $679 million cut in corporate income tax for small and medium-sized businesses to support the economy amid the pandemic-caused downturn.

Zambia (Republic of Zambia)

Moratorium status: C

Overview

The Zambian government has announced a 57 million kwacha (€ 2.7 million) emergency fund (around 0.02 percent of GDP) to strengthen preparedness and enhance public security in the country. 

The Bank of Zambia has announced several measures to stimulate the use of e-money and reduce the use of cash, such as waiving fees for transactions below a certain threshold and relaxing the limits on transactions for individuals, small scale farmers, and enterprises, reducing of the interbank payment processing fees, and more.  

The Bank of Zambia has promised to follow the further development of the COVID-19 pandemic in the country, in order to react with adequate measures.

(Update from 28 May, 2020)

No changes to previously introduced measures.

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