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PH 60-Day Debt Moratorium Backed by Business Groups

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Key Points

  • Business groups praised the compromise reached by both congressional houses on the moratorium on debt payments to relieve Filipinos’ difficulties in many parts of the country during the COVID-19 quarantine.
  • Lim said the law should exclude financial services, such as insurance and pre-need firms, whose very existence could be endangered by Bayanihan 2 and impose additional burdens on the public.
  • Life insurers themselves agreed that the compromise was “acceptable” and a “balanced consideration” of the interests of the public and insurance companies.
  • Visit The Financial Today’s homepage for more stories.

Manila • Business groups praised the compromise reached by both congressional houses on the moratorium on debt payments to relieve Filipinos’ difficulties in many parts of the country during the COVID-19 quarantine.

Over the weekend, Francis Lim, president of the influential Management Association of the Philippines (MAP), said the 60-day freeze on loan repayments was a reasonable solution after an earlier version of the Bayanihan to Recover as One Act (Bayanihan 2) suggested a moratorium on loan payments for up to one year.

“While the MAP supports the 30-day moratorium under the Senate version, 60 days will be a good compromise if 30 days is not doable, provided that it is a one time and non-extendible payment moratorium,” Lim said.

But Lim said the law should exclude financial services, such as insurance and pre-need firms, whose very existence could be endangered by Bayanihan 2 and impose additional burdens on the public.

“The moratorium should also exclude insurance and pre-need companies as they may find it difficult to service claims, especially COVID-19-related deaths,” he said.

Life insurers themselves agreed that the compromise was “acceptable” and a “balanced consideration” of the interests of the public and insurance companies.

“PLIA recognizes the difficulties policyholders may have in settling their due premiums in these trying times. The 60-day period offers a balanced consideration of the insured public’s interest as well as that of the insurance companies,” added Sison, chief executive and country head of Sun Life Philippines.

Sison noted that the 60-day moratorium was equivalent to the industry’s minimum grace period during the enhanced Community Quarantine Declaration in March, representing the 30-day contractual grace period and the Insurance Commission’s encouraged extension.

Insurance Commissioner Dennis Funa made the same arguments when he warned senators and congressmen that a year-long moratorium would be detrimental to the economy in a letter dated 12 August.

“We fear that a one-year moratorium will exacerbate the adverse economic effects of the pandemic to said industries’ financial and capital positions, such that said industries may be permanently unable to recoup the consequent losses during this period, even if we were to consider future premiums,” Funa said in his letter.

Previously, the MAP also warned lawmakers against a year-long freeze on debt payments, as most of the cash held by banks is lent to the public.

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