Businesses oppose 1-year loan moratorium under House's Bayanihan II
MANILA, Philippines — Businessmen on Friday warned against attempts at the House of Representatives to include a one-year loan repayment moratorium in the government's stimulus package, saying such a move will push banks over the brink of financial collapse.
In a statement, the Management Association of the Philippines (MAP) joined economic officials in opposing this provision in the House's version of the Bayanihan to Recover as One Act (Bayanihan II), arguing the move could deal a devastating blow on the country's financial system.
"The 365-day loan moratorium under the House version of the Bayanihan 2, while ostensibly good for our citizens in the short run, may have unintended adverse consequences for the country that can potentially exacerbate the negative impact of the pandemic," MAP President Francis Lim said.
"The moratorium will put to risk our banks' ability to service the withdrawals of their clients and adversely affect public confidence in the banking system," Lim added.
Filed as House Bill 6953, the version of Bayanihan II that House lawmakers passed on Monday orders financial institutions as well as property developers to provide a 365-day loan moratorium or staggered repayment option without slapping interest rates on borrowers.
The original loan repayment timetable may be extended for another year to give borrowers a chance to get back on their feet after curbs meant to arrest coronavirus contagion threw the economy into recession.
Bayanihan II's predecessor, which expired in June, deferred payment schedules for loans falling due during the quarantine period. The Senate's version of Bayanihan II bill provides a one-month debt moratorium.
No less than Bangko Sentral ng Pilipinas Governor Benjamin Diokno cautioned against a one-year grace period for loan repayments, telling reporters on Thursday that "a banking crisis in particular will disrupt the flow of funds between savers and borrowers, impede efficient allocation of financial resources, which ultimately affects economic growth."
In a separate statement on Friday,the Bankers Association of the Philippines echoed Diokno's warning, adding they endorse a 30-day grace period extension to areas under enhanced community quarantine (ECQ) and modified ECQ (MECQ).
"We have to ensure the stability and robustness of the banking system in order to help our economy pave the way towards recovery," BAP Managing Director Benjamin Castillo said.
Final deliberations on Bayanihan II will be held at a bicameral conference committee composed of select Lower House and Senate members. After that, the measure will be up for signature of President Rodrigo Duterte, who can either sign it or veto it.
"It will also drastically lessen the banks’ liquidity, curtailing their capacity to lend at a time when businesses badly need capital to help them recover from the pandemic. This will cause grave damage to the economy that will require significant resources and time to repair," MAP's Lim said.
"We strongly urge the Bicameral Conference Committee to adopt the Senate version of the Bayanihan 2 which limits the moratorium to one month," he added.
- Latest
- Trending
