AMMAN - Economists on Tuesday praised the Central Bank of Jordan’s (CBJ) decision to extend the loan moratorium period for most-affected sectors by the COVID-19 crisis, but said the impact depends on the banks’ commitment.
“There was a lot of public pressure that led the CBJ to postpone repayment of dues and installments of impacted individuals and companies, especially in light of the regression the crisis caused in all sectors, but this does not commit banks to surely postpone borrowers’ repayment of dues,” economist Wajdi Makhamreh told The Jordan Times over the phone.
“Even the JD500 million package that the banking sector pumped into the market have not benefitted all hard-hit sectors and provided proper support, and banks after all will operate in their best interest and benefit, so the impact of the decision depends on their commitment to it,” he said.
The economist speculated that a defence order to ensure commitment would have saved loan borrowers around JD500 million to JD700 million which he said would have gone into the national economy, improving consumption as people would spend their money elsewhere.
Economist Husam Ayesh said that the CBJ played a “significant role” in combating the economic repercussions of the pandemic, especially on individuals and small- and medium-sized enterprises.
“The CBJ helped pump JD500 million into the market, lowered interest rates and took other measures that showed the unity of the banking sector amid difficult circumstances,” Ayesh said.
In reference to the latest announcement, the economist said that “it remains more of a request rather than a commitment”, agreeing with Makhamreh that the banks will eventually take decisions based on their interests and capabilities.
“I support relooking into the loan moratorium period, especially as the defence orders issued throughout the crisis allowed cutting portions of people’s salaries, up to over 50 per cent at times, hindering their capability to meet their dues, especially the ones who completely lost their jobs,” Ayesh said.
He called on banks to reduce interest rates to the most possible minimum percentage, and to combine that with a set of government measures to decrease taxes and costs of energy bills, creating a comprehensive environment for changes that allow boosting the economy and creating movement.
The banking sector can still show solidarity with the people while considering its own credit score ratings and benefits, especially as the money people will save is going to be pumped into the market and maybe go back to banks in form of deposits, Ayesh noted.
As part of its endeavours to alleviate the negative economic impact of the pandemic, notably to give affected individuals and companies enough time to repay their dues to the banks, the CBJ on Sunday decided to extend the validity of the circular issued on March 15, 2020, related to loan moratorium until June 30, 2021.
© Copyright The Jordan Times. All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info).