Makati City Mayor Abby Binay proposed on Tuesday, Nov. 19, the implementation of an automatic loan moratorium for areas in the country that were devastated by natural calamities following the onslaught of six different typhoons in the country in just one month.
"These have caused extensive agricultural damage in many areas and destroyed hundreds if not thousands of homes and small businesses. Granting automatic moratorium on government loan repayments in calamity-hit areas would provide much-needed respite to affected residents, especially farmers and fisherfolk whose sources of livelihood have been wiped out,” Binay said.
In her proposal, the mayor explained that government agencies, banks, and other financial institutions can make it a policy to automatically suspend loan repayments from borrowers located in areas officially declared in a state of calamity.
“It is a reasonable and humane response to the plight of many of our fellow Filipinos,” she said.
“By giving them reprieve from their financial obligation, they can focus on the day-to-day needs of their families and rebuilding their homes,” she added.
Through a loan moratorium, the bank or lending institution makes a temporary agreement with the borrower to stop making loan payments for a certain period. In this way, the borrower can avoid penalties and stabilize finances before resuming regular repayments to the creditor.
The moratorium can also include local government units (LGUs) severely affected by calamities.
Several reports of some LGUs battered by the consecutive typhoons showed that their emergency response funds are already running low.
The loan moratorium can be extended by institutions such as Land Bank, Development Bank of the Philippines (DBP), Department of Agriculture (DA), PAG-IBIG Fund, the Government Service Insurance System (GSIS) and Social Security System (SSS).
“During these trying times, our citizens need all the help they can get in order to survive and recover from the devastating impacts of calamities. The government, through its financial institutions, is in the best position to alleviate their conditions,” Binay stressed.