Reimposition of moratorium on global loans is not in the best interest of the economy, says BNM governor


KUALA LUMPUR (November 13): Reimposing the general moratorium on loan payments in the country is not in the best interest of the country’s economy, said Bank Negara Malaysia Governor Datuk Nor Shamsiah Mohd Yunus .

Earlier this year, the government announced a six-month moratorium on loan and finance repayments that went into effect on April 1 and ended on September 1. This then moved on to a targeted extension of the moratorium to borrowers severely affected by the pandemic, with banks offering a range of other repayment aids to help borrowers, depending on their financial situation.

“Reimposing a general moratorium would not be a proportionate or responsible response under the current circumstances,” Nor Shamsiah said at a virtual press conference today, adding that it is important to preserve equity and banks’ liquidity buffers to ensure they can continue to lend and support the economy. recovery in the future.

” While he [a blanket moratorium] puts money in people’s pockets in the short term, it creates a lot of economic distortions and has a negative impact on the economy, ”said Nor Shamsiah.

Not only does the general moratorium increase the level of overall debt, she said, but it will also limit new lending to households and businesses as the bank cushions run out, while banks in turn become more showers at risk.

“Those who can afford to pay should pay off their debt as it will limit growth and hurt the economy as more borrowers struggle under the weight of higher debt,” she added. .

Debt-led growth is simply not sustainable, said Nor Shamsiah, noting that the household debt-to-GDP ratio now already stands at around 90%, a record high for Malaysia.

It also undermines the interest of depositors who rely on banks to protect their money, and the interest of Malaysians who are shareholders of banks through their funds like ASB (Amanah Saham Bumiputera), the Provident Fund retirement savings. of Employees (EPF), Tabung Haji and Retirement in Retirement Fund (Inc) (KWAP), she said.

“We are seeing that 85% of borrowers have resumed repaying their loans since we switched to targeted repayment assistance and we expect this number to increase further as the economy gradually improves,” he said. Nor Shamsiah said, adding that this was an encouraging sign for the country. economy.

To date, over 650,000 targeted repayment assistance requests have been received with a high 98% approval rate.

Applicants eligible for repayment assistance are those who have lost their jobs, in addition to individuals and SMEs whose incomes have been hit hard by the Covid-19 pandemic.

Also read:
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Bank Negara predicts 6.5% to 7.5% GDP growth but downside risks remain
BNM expects sustained recovery in private consumption

Governor of the BNM: the government still has additional fiscal leeway to support the economy
No urgency for an unconventional monetary policy – Governor of the BNM
Malaysia’s headline inflation sees a weaker 1.4% contraction in 3Q

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