Targeted loan repayment scheme on the cards

Tengku Zafrul says another option is to change the loan repayment terms, amend interest rates and grant other exemptions

pic by BERNAMA

THE government is in talks with local lenders on a targeted aid scheme that could extend loan repayment periods for those struggling to service debts due to the economic fallout from the coronavirus.

Finance Minister Tengku Datuk Seri Tengku Zafrul Tengku Abdul Aziz (picture; left) said discussions have been ongoing as the deadline for the loan moratorium, set for end-September, inches closer.

“Discussions are still underway with local banks to help people in a more targeted manner. One example is to extend the loan repayment period, thus reducing the amount of monthly repayments,” he told the Dewan Rakyat yesterday.

He was responding to a supplementary question by Datuk Seri Ahmad Maslan (Barisan Nasional-Pontian) who asked if the loan moratorium would be extended to those who are hardest hit.

Tengku Zafrul said another option is to change the loan repayment terms, amend interest rates and grant other exemptions until borrowers are financially stable.

“The moratorium is for six months, until September 2020, and the amount allocated for this has been set at RM100 billion.

“Since the reopening of the economy in May, we’ve noticed improvements in the people’s ability to repay their loans with most of them going back to work. As such, the next step is to have continued discussions with local banks to provide a more targeted aid,” he said.

In the meantime, Tengku Zafrul said he hopes borrowers will meet the banks and seek assistance from the Credit Counselling and Debt Management Agency (AKPK).

To another supplementary question by Ahmad on whether the government is considering more stimulus packages, the finance minister said it depends on the recovery of the nation.

“As of now, we do not have any plans to add more into the existing Penjana (short-term National Economic Recovery Plan) and Prihatin packages. Our focus now is to protect the people, support their businesses and strengthen the country’s economy,” he said.

The government has so far unveiled stimulus packages worth a combined total of RM295 billion to revitalise industries badly hit by the coronavirus. Fiscal deficit is expected to swell to 5.8%-6% of GDP this year on the back of efforts to fund the stimulus.

Tengku Zafrul, however, said the government is optimistic that fiscal deficit will be gradually reduced in the medium term, adding that the ministry is in the process of drafting a Fiscal Responsibility Act to make sure that the process is transparent and well executed.

The minister also tabled two bills yesterday — namely, the Supplementary Supply (2019) Act 2020 and the Supply (Reallocation of Appropriated Expenditure) Act 2020 — which seek to add and reallocate RM7 billion to the federal budget following the formation of a new Cabinet on March 10.

The new allocations include RM1.2 billion to the Health Ministry, Finance Ministry (RM762.9 million), Housing and Local Government Ministry (RM635.99 million), Education Ministry (RM623.7 million), Defence Ministry (RM362.96 million) and the Election Commission (RM15.65 million), among others.