The Duterte administration’s chief economic manager is uncomfortable granting a 60-day grace period for payment of loans.
Following reports that lawmakers tasked to reconcile the House and Senate versions of Bayanihan to Recover as One bill (Bayanihan 2) have approved a 60-day loan payment moratorium, Finance Secretary Carlos Dominguez proposed a much shorter grace period of 45 days.
While the lawmakers’ latest move is already a concession from an earlier proposal to oblige banks to grant 365-days moratorium to all borrowers, Dominguez believes there is still room to further shorten this leeway given to borrowers.
“Maximum of 45-days is better,” Dominguez told reporters when asked about the acceptable grace period for the proposed moratorium under the Bayanihan 2 bill.
Last Friday, Dominguez warned that the proposed one-year moratorium on loan payments will negatively affect the local banking system and lenders’ ability to provide loans.
The proposed 365-day moratorium on loan payments is included in Bayanihan 2 bill, the country’s second coronavirus response law.
Should the provision be enacted into law, Dominguez said “ultimately the entire economy will lose disproportionately more than the gains borrowers will make.”
Last Thursday, Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno also said the proposed moratorium on loan payments could lead to bank runs and create a credit crunch which would not help an economy.