International › APA

Rwanda C/Bank suspends Covid emergency loan scheme

The Central Bank of Rwanda has directed commercial banks to revert to normal regulatory guidance in loan restructuring, classification and provision that were introduced earlier following the COVID-19 outbreak, local media reported Friday quoting official sources in Kigali.The purpose of Rwanda COVID-19 Economic Recovery Fund Emergency Loan was to support affected businesses by facilitating them in the refinancing of existing debt obligations, provide working capital, and support investments for business adaptation and growth through the provision of longer-term sources of finance

The outbreak of Covid-19 prompted policymakers to unleash a series of fiscal and monetary policy relief measures, including restructuring of loans for distressed borrowers in order to cushion Rwandans from the effects of the pandemic.

However, in a memo dated November 11, the Central Bank said that the period for allowing banks to restructure loans for  borrowers hit by the COVID-19 pandemic ended in September 2021.

“The purpose of this letter is to remind you that the above relief measures expired and banks are required to continue managing restructured loans,” Central bank Governor, John Rwangombwa, wrote in a memo addressed to chief executives of commercial banks.

It said the move was meant to avoid moral hazard related risks and install transparency in the balance sheets of banks.

In the memo, the central bank said that the decision was informed by its inspections as well as findings from various assessments on economic performance and recovery, especially of the sectors most affected by the pandemic.

“Banks should regularly assess all restructured loans  including Covid-19 restructured loans that may be up to date or still  under moratorium including those that accesses the Economic Recovery Fund,” it stated.

In case the borrower’s ability to service the account properly or may deteriorate because of current market conditions then such facilities should be classified at least in watch category,  the Bank said.

“Banks should ensure that the above treatment of  restructured loans are reflected in the financial statements for the  period ending November 30, 2021 and onward.”

This year, Rwanda expects a strong economic rebound following the 2020 recession— the first in over two decades.

Real gross domestic product (GDP) is projected to grow above 6 percent in  2021, from last year’s contraction of 3.4 percent thanks to the national vaccination campaign that has allowed a gradual reopening of economic activity.

Economists have urged the central bank to ease interest rates to stimulate more lending to the private sector.

Last week, the central bank retained the key repo rate, its benchmark  lending rate, at 4.5 percent, predicting that the financial sector would remain stable in the short and medium term.



Tips
Ekwang Published on 22.09.2022

South West Dish Ekwang, more than just a Meal

Many savour Ekwang based on its wonderful taste, but little consider its nutritional values. Probably one of the reasons out ancestors and grand and great…

More
Subscribe

Subscribe to Journal du Cameroun newsletter and receive all news stories free of charge

Diary
  • No event.
More
Back top