BLANTYRE-(MaraviPost)—On 4th April, 2020, Peter Mutharika, president of the Republic of Malawi, announced new measures of combating the novel coronavirus that is ravaging the world without mercy.
In his national address, Mutharika said “Coronavirus is a public health problem. It is also an economic threat and a social problem”. True to his words, Covid-19 has really affected negatively the global economy and the big economies like USA, UK and China have not been spared.
Having realized that the poor will be very much affected economically by the pandemic, Mutharika directed the Reserve Bank of Malawi to “Implement a win-win arrangement with commercial banks and Micro-Finance Institutions to observe a three-month moratorium on interest and principal repayments for all loans contracted by Micro, Small and Medium Enterprises.”
He added: “Under this arrangement the Registrar will encourage commercial banks to restructure loans to this sector in order to extend their repayment to more than a year.”
Since then, there have been questions from civil servants who have loans with commercial banks and microfinance institutions as to whether the moratorium is crosscutting or only targets the small and medium enterprises. It is against this background that Maravi Post would like to clarify this issue but not thoroughly (Banks are well placed to give thorough clarification).
Note that the moratorium will only affect those who have been greatly affected by covid-19. In this case, civil servants are automatically not qualifying to be given a grace period cognizant of the fact that no civil servant will be furloughed or have their salary affected. However, in a very rare circumstance, you can liaise with the bank to consider shaving your loan after producing evidence that your salary is to be affected by the covid-19.
In view of the above, it is now clear that this moratorium applies to business people and those whose perks will be affected by the covid-19. For instance, the tourism sector has been greatly affected so are their employees. In case of lockdown, business will not run normally. Stock turnover will dwindle drastically. Therefore, those working in such sectors will not be able to make loan repayment and at the same time fend for themselves, hence the need to give them grace period.
It must also be noted that the moratorium will not be effected automatically. Clients are supposed to go and liaise with their banks. This has already been emphasized by other banks like FDH.
On a light note, please observe financial prudence because nobody knows what comes next if the covid-19 prolongs its stay.