July 1, 2021
The government has decided to extend the loan deferment scheme by one more year until June 2022.
A press release from the Prime Minister’s Office (PMO) stated that considering the continued impact and uncertainties posed by the pandemic, all loans sanctioned as of June 30, 2020 would be eligible for the deferment.
However, the financial service providers (FSPs) could also negotiate with the borrowers for the revival/rehabilitation or foreclosure of non-performing loans (NPL).
As of June 30, last year, financial institutions laoned out about Nu 162.927 billion (B). The NPL, which are loans with repayments overdue by more than 90 days, was 16 percent at Nu 26.616B.
To ease the burden of loan repayment, FSPs could extend the loan tenure by the deferred period or by up to five years depending on the repayment capacity of the borrowers.
Incentive for regular repayments during the deferment period will also be considered. The FSPs will continue to provide one percent interest rate reduction on term loans for another year from July 2021 to June 2022 to borrowers who service their loan installments (after adjustment of 50 percent interest payment support) during the deferment period.
According to the press release, FSPs will not capitalise the interest accumulated during the deferment period. This mean that the total accumulated interest between April 2020 to June 2022 will not be added to the principal amount. Borrowers could pay the interest in equal installments after the end of the deferment period.
FSPs will provide a gestation period of one year, where no repayments would be required, until June 2022 for the bridging loans or soft term loans granted to the business entities under the Phase II Monetary Measures. The interest accumulated will not be added to the principle during the gestation period. The total accumulated interest from April 2020 to June 2022 will be payable in equal installments after the end of the gestation period.
The Royal Monetary Authority will be issuing standard operating procedures for the implementation of the Phase III Monetary Measures.
Besides the 33 percent capital budget, the highest so far, earmarked for the 2021-22 financial year, additional fiscal measures are also extended until December 2021.
Income tax deferral for the income year 2019 for tourism and affected sectors including entertainment sectors will be considered on a case-by-case basis upon application from July to December, 2021.
To enable business entities to settle their corporate and business income tax (CIT/BIT) outstanding, installment payment of income tax will be extended.
For industries, electricity charges can be paid based on actual consumption from July to December, 2021. The payments will be considered for deferral on a case-by-case basis upon application. To ensure that the deferrals are targeted towards industries actually affected by the current situation, the finance and economic affairs ministries will verify the eligibility criteria during the extended period.
WiFi and electricity will be provided free of charge to the hotels used as quarantine facilities until December 2021.
As the tourism and the aviation sectors continue to be severely impacted, waiver of payment of monthly rent and other charges for tourism-related businesses leasing government property shall be continued until December 2021.
According to the press release, the rationalisation of customs duty, which was passed by the Parliament recently, as ‘Customs Duty Act 2021’ would stimulate economic activities, promote export, and contain inflation.
As the existing fiscal incentives expired by December 31, 2021, the press release stated that the government would review the existing fiscal incentives and propose revision of incentives to ensure business continuity and stability besides supporting a resilient economic recovery.
Also, the effectiveness of the fiscal measures would be reviewed by December this year and extended based on the situation of the pandemic.