THE Bank of Guyana will extend the moratorium to December 2020 to allow banks to further defer customers’ payments to the end of 2020, President Irfaan Ali announced, during a televised address to the nation on Wednesday.

The President noted that COVID-19 has posed a serious financial threat and government is examining a number of measures.
He said that to cope with the low revenue generation, Bank of Guyana Governor, Dr Gobind Ganga, in consultation with the Bankers Association, came to an agreement to deal with the low revenue generation and the needs of customers.

President Ali said this has resulted in loans not being classified as “non-performing” and will not require loan-loss provisioning.
“The Bank of Guyana will relax Section 14 and 15 of the supervision guideline number five to December 2020. Additionally, a waiver is being given to Section 13 of supervision guideline number five, the relation of stringent statutory measures is intended to result in direct benefits of customers of banks by giving the financial institution the ability to operate with more flexibility,” President Ali said.

He said that the Bank of Guyana will reduce liquidity requirements by lowering of the reserves requirement from 12 per cent to 10 per cent and by lowering the liquid asset requirements for demand and deposit from 25 per cent to 20 per cent, along with saving and time deposit from 10 to 15 per cent.

This, the head of state said will result in overall increase liquidity in the financial sector. The reduction in reserve requirement will result in the injection of $9.4 billion and the reduction in the liquid asset requirements will immediately release an estimated $23.3 billion into the economy.

Further, the President said 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 five to six per cent.

“This is to encourage businesses to remain open. The current average short-term financing rate ranges from eight to 11 per cent, making this reduction a significant step towards promoting business continuity,” the President said.

Additionally, the President said commercial banks will offer general concessional interest rate of one per cent and up to two per cent on customer loans below $10M until December, 30, 2020. The existing lending ranges from 6.5 to 16 per cent.

“Some commercial banks agreed to apply special treatment to the interest accrued during the moratorium period, including but not limited to, no capitalisation, term extension and foregoing of interest in special circumstances to a loan with an outstanding balance of $10M and below,” he said.
Nevertheless, President Ali said commercial banks have agreed to waive all bank charges, especially at the ATM, local merchant charges to encourage more out of bank transactions, as well as no charges of transactions by senior citizens.

He noted that the measures will not affect the soundness of the bank system and financial architecture, as the measures outlined are not the answer to all the potential consequences of COVID-19.