Are you sure?

Lawmakers extend repayment moratorium

Parliament unanimously approved on Tuesday legislation extending a moratorium on loan repayments, but only for vulnerable borrowers, according to a report by state news wire MTI.

Image by Shutterstock.com

The legislation was approved with a vote of 166 for, none against and no abstentions.

The legislation extends a blanket loan repayment moratorium set to expire at the end of the year by six months, but only for families with children, pensioners, the jobless, fostered workers and companies struggling financially because of the pandemic. The moratorium was one of the first measures the government introduced in the spring to shield against the economic fallout from the pandemic.

The legislation allows the government to define the indicators for "struggling" companies by decree. When Prime Minister Viktor Orbán announced plans for the extension in September, he said the measure would apply to companies whose revenue has dropped more than 25%.

The PM also said the opt-in for the moratorium would be automatic for the affected retail borrowers, but eligible businesses must contact their lenders to avail of the extension.

The legislation approved on Tuesday prohibits banks from canceling any retail or corporate pre-crisis loan contracts until the end of next June, effectively putting the onus on lenders to restructure the credit of distressed borrowers who are not covered by the extended moratorium.

The legislation prohibits any increase in principal either during or after the moratorium, and it mandates payments of accumulated interest to be spaced out evenly after the moratorium ends, the same as for the initial moratorium.

In the debate of the legislation before the vote, state secretary for financial affairs Gábor Gion said the extension could leave HUF 400 billion-450 billion with households and businesses.

The initial moratorium, of which 59% of retail borrowers and around 63% of corporate borrowers availed, generated savings of HUF 2 trillion, he added.