Commercial banks in the country deferred about K123.8 billion in 2020, on moratorium offered to cushion citizens and businesses from economic hardships emanating from the Covid pandemic.
The moratorium window was opened earlier last year. The period was extended from December 2020 to June 2021, which is subject to review by the Reserve Bank of Malawi (RBM) in consultation with stakeholders.
Figures provided by the central bank show that, as at December 31 2020, there were 350 facilities in the entire banking sector amounting to K20.4 billion under moratoriums compared to a total of 1,936 loan facilities amounting to K103.4 billion recorded in June 2020.
This means that individuals and firms applied for moratorium when the window was just opened than from June to December at the back of an ease in new Covid cases.
In a response to an emailed questionnaire, RBM spokesperson Onelie Nkuna hailed commercial banks for swiftly responding to a call to bail businesses and individuals out.
“As you are aware, the first wave had hit the business community hard when economic activity was already sluggish due to a number of factors. As such, the moratoriums somewhat aided in keeping business operations afloat,” she added.
In a separate interview, economist from The Polytechnic Betchani Tcheleni said while the moratoriums gave a breather to individuals and companies, the slowdown in business outweighed its impact.
He said, considering the figures provided, the financial sector might have also registered a slow-down in business.
“It means the financial sector stalled at that moment because interests were not supposed to be charged,” Tcheleni said.
The pandemic has brought most sectors of the economy to their knees, affecting economic growth prospects.
The central bank recently said economic growth outlook for 2021 remains uncertain, mainly due to the second wave of the pandemic.
Capital Hill had predicted that the local economy could swell by 4.5 percent in 2020, up from 1.2 percent in 2020.
The Economist Intelligence Unit has revised downwards its projection for Malawi’s economic growth from 4.7 percent to 2.1 percent in 2021.
According to Nico Asset Managers 2020 Economic Report, the revision has been necessitated in anticipation of the impact that coronavirus will have on the economy.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.