Central Bank extends moratorium to year-end

Aug 21, 2020 News

– to bring further relief to other loan institutions, customers

While being a global health risk, COVID-19 poses a serious financial threat.
As such, the Bank of Guyana (BoG) has decided to extend the moratorium to December 2020 to allow banks to further defer customer payments to end of the year.
The decision was taken following consultations between the Governor of Central Bank, Dr. Gobind Ganga and the Guyana Bankers’ Association.
During an address to the nation on Wednesday, President Irfaan Ali said that the accommodation will result in loans not being classified as non-performing.
He noted that the Bank of Guyana will relax Sections 14 & 15 of Supervision Guideline (SG) No. 5 to December 2020.
Ali announced too that the Bank of Guyana will reduce Liquidity Requirements in two areas lowering of the reserves requirement from 12 per cent to 10 per cent; lowering the liquid assets requirement for demand deposits from 25 per cent to 20 per cent and savings and time deposits from 20 per cent to 15 per cent.
“Additionally, a waiver is being given to Section 13 of Supervision Guideline No. 5. The relaxation of stringent statutory measures is intended to result in direct benefits to customers of banks by giving

BOG Governor, Dr. Gobind Ganga

the financial institutions the ability to operate with more flexibility. These measures will result in overall increased liquidity in the financial sector. The reduction in reserve requirements will result in the injection of $9.4 billion and the reduction in the Liquid Asset Requirements will immediately release an estimated G$23.3 billion.”
Further, the President noted that commercial banks agreed to continue supporting businesses with short-term working capital needs to meet payroll and other short-term funding requirements at concessional rates between 5-6 per cent to encourage businesses to remain open.
He explained that: “The current average short-term financing rate ranges from 8 per cent to 11 per cent, making this reduction a significant step towards promoting businesses continuity.”
Commercial Banks agreed to offer general concessional reductions of interest rates of one per cent and up to two per cent on consumer loans below $10 million until December 31, 2020. The existing lending rate ranges between 6.5 per cent and 16 per cent.”
According to Ali, some commercial banks have agreed to apply special treatment to the interest accrued during the moratorium period including (but not limited to) no capitalisation, term extensions and forgoing of interest in special circumstances to loans with an outstanding balance of G$10M and below.
“Commercial banks have agreed to waive all bank charges especially ATM/local merchant charges to encourage more out of bank transactions as well as charges for transactions by senior citizens. These measures will not affect the soundness of our banking system and financial architecture,” the President added.

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