PETALING JAYA, Sept 1: Two economists have expressed opposing views about the government’s decision not to extend a moratorium on loan repayments for another six months following the extension of the recovery control movement period until Dec 31.
The moratorium is due to expire on Sept 30.
Goh Lim Thye, a senior economics lecturer at Universiti Malaya, said the government should extend the moratorium. Banks should have no problem prolonging the loan deferment period as it could be considered as part of their corporate social responsibility programmes, he said.
He also said that while the loan deferments might affect the profit and cash flow situations of the financial institutions in the short and medium-term, it would help to recover the loans entirely in the long run.
“Besides, without the loan moratorium, the financial institutions may encounter a period of significant non-performing loans. The loan deferments will reduce that situation,” he said.
Former finance minister Lim Guan Eng was among those who have urged Putrajaya to extend the moratorium for six more months. He said that the end of the moratorium would severely affect jobs, small-medium enterprises and also manufacturers. A six-month extension would only cost banks some RM6.4 billion, which financial institutions could bear.
However, another economist, Centre for Market Education chief executive Carmelo Ferlito, said a further extension would be harmful to banks.
The first moratorium extension was targeted and gave banks the final decision. A further extension might hurt banks too deeply, he said.
However, he said the extension of the movement control order would create bigger difficulties for borrowers, as many subsidies will expire soon.