The Executive and the Superintendent of Banks extended for a period of six months, until June 2021, the banking moratorium that was installed last April to ease the burden on hundreds of thousands of people affected by the pandemic who have obligations to banks.
It will be until June 30 next year that the new banking agreement will take effect on January 1, with the expiration of the so-called banking moratorium law on December 31.
Panama has restarted all economic activities after having implemented one of the most severe confinements to avoid the contagion of the Covid-19 virus. The first case occurred on March 9 of this year, and with it they stopped for approximately three months. The last economic block that was reactivated in October was the tourism and hotel sector, one of the most affected by the pandemic.
The extension of the moratorium is aimed at maintaining the viability and sustainability of 1,920,677 existing credit operations, according to figures from the Super Bank. Modifications may include granting grace periods based on each customer’s new payment capacity, extending loan terms, adjusting the bill or monthly payment, among other options.
The economic recovery has not yet been as expected. Of the more than 270 thousand suspended contracts, about 80 thousand have been reactivated. The presence of the virus still represents a very high risk for the Panamanian economy. The concern of clients for the end of the banking moratorium, put the hair on the head of families and businesses that still do not manage to stabilize their pockets.
Banks and clients will be able to agree to new terms and conditions on their loans based on their ability to pay or their current economic condition and should not be understood as debt forgiveness.
This delicate balance, between protecting life, alleviating the social situation and maintaining the economy, continues to be our main parameter for establishing priorities, said President Laurentino Cortizo during the presidential signing ceremony.
Banking plays a vital role in economic recovery, financing affected businesses for those who can restart and maintain jobs, and facilitating access to credit for new ventures that contribute to job creation.
The modification agreement number 13-2020 approved by the Board of Directors of the Superintendence of Banks, allows that between the banks and clients it is possible to continue making the necessary modifications to maintain a viable and sustainable credit relationship.
On the basis of this agreement, both parties, banks and clients, may agree on new terms and conditions for their loans based on their capacity to pay or their current economic condition and should not be understood as debt forgiveness.
The banks will not execute the guarantees of the loans that are already modified or those that are modified, in the new term granted, including houses, farms, land, commercial premises, cars, buses and other guarantees.
In addition, no late interest charges or fees or penalties will be applicable to the modified loans and no customer credit references will be affected during the additional period for agreeing on loan modifications.