BCRP asks Congress to shelf Bill calling for loan and interest payments moratorium

PERU - In Brief 17 Jun 2020 by Alfredo Thorne
Last night, Banco Central de Reserva del Peru (BCRP)’s Governor, Julio Velarde, sent a strong letter to the Head of Congress’ Consumer Defense Commission and asked to shelf the draft Bill that proposes to suspend bank loan and interest payments for 120 days.He said that this bill instead of benefitting the banking system debtors, actually hurts them and would introduce a high fiscal cost. Most of the micro-finance financial institutions that offered loans to small and medium-sized enterprises would fall into bankruptcy as a result of these Bill, leaving these debtors with no access to the banking system.In addition, the close to 10 million savers could also get hurt. He reminded congressmen that some of these financial institutions are protected with a government-guaranteed deposit insurance and if they go bust, the government would have to pay depositors, resulting in a large fiscal cost.Today the Consumer Defense Commission is due to vote on the Bill. However, the rumor is that their members are still debating the Bill. With the populist bias in Congress, it is apparent that the Bill has good chances. But we believe that it would be watered-down this afternoon. We would keep you posted.

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