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Singapore set to fine-tune debt moratorium schemes

Singapore set to fine-tune debt moratorium schemes

Source: Business Times
Article Date: 29 Sep 2020
Author: Jamie Lee

MAS looking to extend its programmes to certain borrowers beyond Dec 31 2020, while also ensuring that those able to pay should begin repayment before the moratoriums expire,

Singapore will soon calibrate its debt moratorium schemes, with the regulator looking to extend its programmes to certain borrowers beyond Dec 31 this year, while also ensuring that those with the ability to pay should begin repayment before the moratoriums expire, The Business Times understands.

This comes as the regulator had earlier warned of the "cliff effect" on the financial system if the repayment ability of borrowers who chose to take a debt holiday amid the global pandemic is only assessed at the point when the moratorium schemes officially end.

Qualifying SMEs seeking to pause their principal payments on their secured term loans have been able to do so, and have a deferment last till Dec 31, 2020. Property owners with a mortgage have also been able to ask to defer both principal and interest payments, or just the principal payments, up till Dec 31 this year.

The Monetary Authority of Singapore (MAS) had earlier said that in Singapore, 12 per cent of the economy is at the "epicentre" of the Covid-19 crisis. Companies in sectors hit hardest - specifically construction, travel-related, and consumer-facing services - are expected to take some time to recover.

Certain industries or activities may be "permanently impaired" by the crisis due to a range of factors, including a shift in supply chains and consumer demand patterns, said MAS managing director Ravi Menon at the central bank's annual report briefing.

Maybank-Kim Eng earlier estimated that about 12 to 16 per cent of total loans are under moratorium and other relief schemes from the local banks.

The three local banks in Singapore are estimated to have granted payment deferments to more than S$15 billion worth of mortgages as at the end of June this year, data from the MAS had shown.

All in, the total value of deferred mortgages in Singapore as at end-June make up almost 10 per cent of all outstanding mortgages.

The total value of secured loans that have been deferred by small and medium-sized enterprises (SMEs) here was more than S$11.4 billion as at June 30. This is roughly 25-30 per cent of more than S$40 billion in secured loans currently taken by SMEs that MAS estimated in March could qualify for debt moratoriums.

The upcoming fine-tuning of the debt moratorium schemes comes as the General Insurance Association of Singapore and the Life Insurance Association, Singapore just this month moved to extend premium-deferment measures for policyholders. This gives them more time to pay insurance premiums, while maintaining their coverage.

All in, Singapore's fiscal outlay in response to the pandemic has stood at some S$93 billion - the largest in Singapore's history.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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