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Zimbabwe advised improving human rights and paying off debts for relief

Zimbabwe flag image

One of Zimbabwe’s biggest creditors turned down a government request for debt relief until it improved its human rights record and paid off outstanding debt arrears.

The southern African country’s appeal for relief was rejected in a June 12 letter to Zimbabwe’s Minister of Finance Mthuli Ncube from Odile Renaud-Basso, president of the Paris Club.

The group, to which Zimbabwe owed $ 3.26 billion in 2018, represents creditor countries, including members of the Organization for Economic Co-operation and Development.

The letter, seen by Bloomberg, was in response to an April 2 appeal from Ncube to chiefs of the International Monetary Fund, world Bank, African development bank, Paris Club and European Investment Bank search for an arrears clearance and debt relief program.

Zimbabwe’s relations with multilateral lenders have been strained for nearly 20 years as it has failed to meet its payments and a series of elections has been marred by violence and irregularities.

“Zimbabwe’s desire to normalize its relations with the international community can only progress after the implementation of fundamental economic and political reforms,” said Renaud-Basso. The necessary reforms relate to “respect for human rights, in particular freedom of assembly and expression,” she said.

Debt relief was a key part of Ncube’s strategy to revive the economy after two decades of stagnation. But attempts to drive economic reforms and improve relations with lenders have been thwarted by the Zimbabwean security forces’ violent crackdown on a series of protests.

Schwan Badirou-Gafari, secretary general of the Paris Club, declined to comment, as did Clive Mphambela, spokesperson for the Zimbabwean Treasury.

(With contributions from Bloomberg)


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Thinktank Asks Sunak to Help Debt “Zombie Companies” | Debt relief

One in five businesses in Britain is a ‘zombie business’ struggling to stay afloat after a boom in corporate debt levels during the coronavirus pandemic, a leading Tory think tank has warned.

Calling the chancellor, Rishi sunak, to use the autumn budget to launch a corporate debt relief program, think tank Onward said crippling debt levels accumulated during the crisis will hamper the UK’s economic recovery.

Onward, led by a former senior adviser to Therese May – and with close ties to the Treasury and an advisory board filled with big Tories – debt accumulated during the lockdown could push 4.3% of UK businesses – employing 1.8 million people – to technical insolvency.

He said a debt relief program should be used to allow companies to gradually repay state-guaranteed loans taken out during the crisis, via a surtax on profits and shareholder payments. It would depend on the income level of a business, similar to the student loan system for tuition.

After the lockdown ended economic and social life this spring, plunging the UK economy into its deepest recession on record, more than £ 52 billion was borrowed by UK businesses, thanks to loans from emergency guaranteed by the State.

Onward said rising debt levels meant up to 20% of UK businesses were now ‘zombies’ – meaning their profits only cover the ongoing cost of their debt interest payments . He said companies burdened with debt would be less likely to invest to boost Britain’s economic rebound after the pandemic.

The intervention comes as banks bolster their teams of debt advisers to deal with a flood of corporate insolvencies triggered by the pandemic. HSBC UK plans to almost triple the size of its debt management team by year-end increase in defects.

The bank’s financial distress team, which deals with businesses and individual customers overdue on loans, credit cards or mortgages, has already doubled its workforce to 800 employees since the Kingdom’s shutdown United in March.

“We will probably pass 1,000 before the end of the year,” Stuart Haire, head of retail banking and wealth management at HSBC, told The Guardian.

An interactive debt chart

Staff will undergo mandatory training on how to deal with vulnerable borrowers and some of them will be trained on how to approve a wider range of forbearance options for clients who might otherwise have difficulty repaying. their debts. Several “specialists” will also be present to treat more complex cases.

Lloyds is moving up to 600 employees who previously handled Payment Protection Insurance (PPI) abuse claims to a team in financial difficulty.

NatWest has grown its debt management team from 1,000 to 1,650 since March, while Santander has added dozens of employees to its personal and business debt management units.

The UK’s top four lenders have so far this year set aside a collective £ 15.6bn in provisions for Covid-linked loans – money to cover a potential default. HSBC has set aside $ 3.8 billion (£ 2.9 billion) in the second quarter alone, including $ 1.5 billion related to its UK operations. Lloyds has set aside £ 2.4 billion to cover bad debts in the second quarter.


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Options for Paying Off Your Debt: Debt Relief Orders

Debt Relief Orders (scrutineers) are a way to pay off debts if you owe less than £ 30,000, don’t have a lot of income, and don’t own your home.

If you get one:

  • your creditors cannot get their money back without court authorization
  • you are usually released (“released”) from your debts after 12 months

Get a debt relief order

You get a Scrutineer from the official receiver, a bankruptcy court officer, but you must apply through a licensed debt counselor. They will help you fill out the paperwork.

There is a list of organizations that can help you find a licensed debt counselor in the scrutineers.

Costs

The costs of the official receiver are £ 90. Your debt counselor can tell you how and when to pay it off. In some cases, a charity may be able to help you with the cost – ask your debt counselor.

Eligibility

You are generally eligible if you meet all of these criteria:

  • you owe less than £ 30,000
  • you have less than £ 75 per month of side income
  • you have less than £ 2,000 in assets
  • you do not own a vehicle worth £ 2,000 or more
  • you have lived or worked in England and Wales for the past 3 years
  • you did not ask to Scrutineer in the last 6 years

Restrictions

You have to follow rules called “restrictions” if you get a Scrutineer.

This means that you cannot:

  • borrow more than £ 500 without notifying the lender of your Scrutineer
  • act as director of a company
  • create, manage or promote a business without court authorization
  • run a business without talking about your Scrutineer

If you want to open a bank account, you may also need to inform the bank or mortgage company of your Scrutineer.

The restrictions generally last 12 months. They can be extended if reckless or dishonest behavior caused your debt problem. For example, you lied to get credit.

The official receiver will tell you if they need to be extended. To extend them, you will be asked to accept a “Debt Relief Restriction Commitment”. The court can issue a “debt relief order” if you don’t agree.

What would you like to know

While you have a Scrutineer you still have to pay:

  • your rent and bills
  • certain debts, for example student loans, court fines

scrutineers can be canceled if:

  • your finances are improving
  • you do not cooperate with the official receiver – for example you do not give him the information he asks for

If you incur new debt after your Scrutineer is approved, you can:

  • get a bankruptcy order
  • be sued if you do not inform the new creditors of your Scrutineer

Your Scrutineer is added to the personal insolvency register – it is deleted 3 months after the Scrutineer ends.

Your Scrutineer will remain on your credit report for 6 years.


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World Bank and IMF advocate for debt relief for the poorest countries

ISLAMABAD: The World Bank Group and the International Monetary Fund (IMF) in a joint statement on Wednesday called on all official bilateral creditors to suspend debt payments from countries of the International Development Association (IDA) which request the abstention following the outbreak of the COVID-19 virus.

Pakistan is also on the list of 76 countries eligible to receive IDA resources under concessional loans. Pakistan owed about $ 11 billion to official bilateral creditors of the Paris Club countries and Islamabad had already obtained debt relief in 2002-2003 for 10 years when Pakistan decided to support the United States in its war against terrorism in the aftermath of September 11, 2001. During this period, Pakistan had benefited from a tax cushion on the debt repayment front of official bilateral Paris Club donors. Pakistan had to sign an agreement with each country separately after making an agreement to get a Paris Club concession. It is not yet clear whether Islamabad would seek debt relief from official donors or not at this point, as this correspondent made an effort to contract Federal Minister of Economic Affairs Hammad Azhar to get the version and also sent him a message. but received no response until this report was tabled. .

However, the World Bank Group and the International Monetary Fund issued a joint statement to the G20 regarding debt relief for the poorest countries and said the coronavirus outbreak is likely to have serious economic consequences. and social for the IDA countries, which are home to a quarter of the world’s population and two-thirds of the world’s population live in extreme poverty.

He said that with immediate effect – and in accordance with the national laws of creditor countries – the World Bank Group and the International Monetary Fund are calling on all official bilateral creditors to suspend debt payments from IDA countries seeking forbearance. . “This will help meet the immediate liquidity needs of IDA countries to meet the challenges posed by the coronavirus epidemic and will allow time for an assessment of the impact of the crisis and the financing needs for each country,” added the joint press release.

“We invite the leaders of the G20 to instruct the World Bank Group and the IMF to carry out these assessments, in particular by identifying the countries with unsustainable debt, and to prepare a proposal for comprehensive action by the” bilateral creditors ” We will seek approval of the proposal from the Development Committee at spring meetings (April 16 and 17).

“The World Bank Group and the IMF believe it is imperative at this time to provide a sense of global relief to developing countries as well as a strong signal to financial markets. The international community would welcome the support of the G20 to this call to action, ”he added. concluded.

Meanwhile, Federal Economic Affairs Minister Hammad Azhar said, “We welcome the joint WB and IMF statement calling on G20 countries to suspend debt payments from dev [developing] countries. Prime Minister Imran Khan has urged this since the COVID-19 pandemic. We hope that it will be accepted, and we also urge the multilaterals to reduce their debts. “


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Chinese debt could implode emerging markets

The new coronavirus has crippled the global economy. Global growth is expected to drop from 2.9% last year to deeply negative territory in 2020, the only year after 2009 that this has happened since World War II. Recovery is likely to be slow and painful. Government restrictions aimed at preventing the resurgence of the virus will inhibit production and consumption, as will defaults, bankruptcies and staff cuts that have already produced record unemployment claims in the United States.

But not all countries will endure the pain of the global recession equally. Low-income countries suffer from poor health infrastructure, hampering their ability to fight the coronavirus, and many of them had dangerously high debt levels even before the pandemic required emergency spending massive. Foreign investors are now withdrawing capital from emerging markets and sending it back to the rich world in search of a safe haven. As a result, countries like South Africa, Kenya and Nigeria see their currencies drop in value, making it difficult, if not impossible, to service foreign loans.

Faced with the threat of financial ruin, poor countries have turned to multilateral financial institutions such as the International Monetary Fund and the World Bank. The IMF has already released emergency funds in at least 39 countries and, by the end of March, more than 40 more had approach there for help. The World Bank has accelerated $ 14 billion for crisis relief efforts. Yet even if they offer extraordinary amounts of aid, the IMF and the World Bank know that these amounts will be far from sufficient. For this reason, they called on the Group of 20 creditor countries to suspend the collection of interest payments on loans they have made to low-income countries. On April 15, the G-20 pledged: all of its members agreed to suspend these repayment obligations until the end of the year – all but one member, that is.

China has adhered to the G-20 pledge but added caveats that mock it. China is effectively excluding hundreds of large loans made under its Belt and Road Initiative (BRI) for infrastructure development. “Preferential loans,” such as those granted by the Import-Export Bank of China (EximBank), “are not applicable to debt relief,” the Beijing spokesperson said. World time the day after the G-20 announcement. EximBank has funded more than 1,800 BRI projects in dozens of countries. By continuing to demand interest payments on loans, China will force poor countries to choose between servicing their debts and importing essentials such as food and medical supplies.

PREFERENTIAL OR PREDATORY?

Based on the information we have gathered from a wide range of sources, we estimate that between 2013 and 2017, China lent more than $ 120 billion to 67 countries, mostly developing, through the BIS. Exact figures are impossible to obtain due to the opacity of these loan agreements. But the loan growth that China reported for 2018 and 2019 suggests that these countries’ BIS debts now total at least $ 135 billion.

China has granted nearly half of all new loans to countries considered to be at high risk of default.

Figures like these put China as the number one international lender. In 2017, Pakistan, for example, had borrowed at least $ 21 billion from China, or 7% of its GDP. South Africa had borrowed about $ 14 billion, or 4% of its GDP. Both countries, like many others, owe much more to China than to the World Bank. Other countries owe China even more as a percentage of GDP. We estimate that in 2017, Djibouti’s debts to China totaled 80% of GDP; Ethiopia accounted for almost 20% of the GDP. And Kyrgyzstan, one of the first countries to receive IMF funds for the coronavirus, owed China more than 40% of its GDP. Since 2013, China has provided almost half of all new loans to countries considered to be at high risk of default.

China charges substantial interest on its loans. Although Beijing calls its rates “preferential,” some BRI projects, especially the larger ones, bear interest rates. more than three percentage points higher than the cost of capital of Chinese banks, about four to six percent. World Bank dollar loans to low-income countries, on the other hand, tend to have low rates. just above one percent. And given that China itself is one of the World Bank’s biggest borrowers, with $ 16 billion in outstanding loans, the country effectively borrows cheaply from the developed world and repays, through the BIS, a significant increase.

AN IMPOSSIBLE CHOICE

Chinese low-income borrowers depend on the dollar, the euro, and other major foreign currencies to pay for their imports and repay their debts. But many lack sufficient reserves to cover both. Zambia, a BRI client who has borrowed more than 6 billion dollars from China, has enough reservations cover only two-thirds of the foreign payments it will have to make in the coming year. Imports and debt servicing over the next year are expected to wipe out South Africa’s total reserves. If these countries default on their sovereign debt, which increasingly seems likely, they would be excluded from international credit markets and unable to manage the fiscal and trade deficits needed to curb the pandemic.

If the developing world cannot repay its debts, the global health and economic crisis will only worsen.

However, these countries are not the only ones to suffer from it. Even if defaults only start in a few countries, they will spread widely as investors flock to US Treasuries, German Bunds, gold and other traditional safe havens. At the beginning of April, foreign investors had already took of over $ 96 billion from all emerging markets, an exit rate well above that of the last financial crisis. As a result, the South African rand and the Brazilian real have each fallen 25% so far this year. Additional capital outflows will push these currencies down any further, the costs of sending essential imports are skyrocketing. Food prices are already prick across Africa. The United Nations projects that the continent will need to spend an additional $ 10.6 billion on health care this year to fight the pandemic, with foreign medical supplies and pharmaceuticals making up a large part of that. Increased capital flight therefore means greater malnutrition, faster disease transmission and more migration.

In short, if the developing world cannot repay its debts, the global health and economic crisis will only get worse. China, where the pandemic started, has certainly taken an economic hit. But with over $ 3 trillion in foreign exchange reserves and a currency that has remained stable throughout the crisis, it is much better positioned to weather the storm than most of its borrowers. These borrowers, with plummeting currencies, capital flight and threatening medical bills, are unable to repay the BIS to China.

Although commentators have long compared the BIS to a Marshall Plan for developing countries, the two initiatives could not be more different in their approach. The size of the funding may be comparable (US Marshall aid was worth about $ 145 billion in current dollars), but the similarities end there. Marshall aid consisted entirely of grants, while BIS funding consisted almost entirely of debt. This debt is now choking developing countries as they struggle to emerge from a devastating pandemic. Rather than adding to their woes, China should do its part to help lift these nations out of the crisis. It can start by declaring a full moratorium on BIS debt repayment until at least mid-2021.

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Remarks by Under-Secretary-General for Humanitarian Affairs and Emergency Relief Coordinator Mark Lowcock – World

At the high-level event on financing the 2030 Agenda for Sustainable Development in the Age of COVID-19 and beyond – as delivered

New York, September 29, 2020

Zeinab, thank you.

Excellencies, it has been a year of unpleasant surprises.

The virus itself, of course, took us by surprise.

Many were surprised by the severity of the global recession it brought about.

But we were not surprised that this recession hit hardest the fifty or so countries where some 100 million people already survive only thanks to the help they receive from humanitarian agencies like the ones I coordinate.

Some, however, were surprised at how quickly the damage was done.

As David Malpass has just said, for the first time since the 1990s, extreme poverty will increase. Life expectancy will drop. The annual number of deaths from HIV, tuberculosis and malaria is expected to double. The number of people at risk of starvation could also double.

The carnage is concentrated in the most vulnerable countries.

As the new report from goaltenders Bill and Melinda Gates indicates, the past 25 weeks threaten to destroy 25 years of developmental progress.

It is worth remembering what many poor countries looked like 25 years ago. I was working in a country where a quarter of children never saw their fifth birthday, most never went to school, and one in 18 women died in childbirth. Do we really want to get it all back?

No.

All the more surprising, then, that while richer countries have rightly rejected the rules for injecting liquidity and budget support into their own economies to protect their own citizens, they have done so little to protect countries. the poorest – who don’t have the capacity, resources or access to markets to do the same.

It’s surprising at first since everyone knows what to do. Many of the actions needed, especially to mobilize international financial institutions to help the most vulnerable countries, were taken as recently as the 2008-09 financial crisis.

This is surprising in the second place because much of what needs to happen would cost the better-off countries very little in budgetary terms, especially in the short term.

And third, it’s surprising that the richer countries don’t take action now is not just a failure of generosity or empathy. It is an act of self-harm. Like the virus, the problems that will be created by the huge economic contraction we are witnessing will come back to bite everyone. All around the world.

All the poverty, hunger, disease and suffering will fuel grievances and despair. And in their wake will come conflict, instability, migration and refugee flows, all providing relief to extremist and terrorist groups.

The consequences will be far away and will last a long time.

And no one will be able to say that he was surprised by it.

So let’s surprise ourselves in a positive sense.

Let’s take the obvious, inexpensive, self-interested and generous steps to mitigate all of this now.

Protect aid budgets, expand and expand debt relief as Kristalina said, beyond the debt service suspension initiative, issue SDRs and devote them to the poorest countries, and use the balance sheets of shared financial institutions more aggressively to protect the most vulnerable.

Thank you very much.


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How Will Debt Settlement Affect My Credit Rating?

Debt settlement usually has a negative impact on your credit rating. The negative impact depends on many factors: the current state of your credit, your reporting practices, creditors, the size of the debts being settled, whether your other debts are in good standing, how much less than the initial balance for which the debt is settled, and a host of other variables.

Key points to remember

  • While debt settlement may be the best option for eliminating past due obligations, it can negatively impact your credit score.
  • Ironically, stronger credit scores are harder to settle through debt settlement than poorer ones.
  • The best type of debt to settle is a single large debt that is one to three years past due.
  • Don’t try to pay off debt at the cost of falling behind on your other obligations.

Why debt settlement can hurt your credit score

Why would that have a negative impact, when you ease the burden of your obligations and your creditors get the money? Because strong credit scores are designed to reward accounts that were paid on time according to the original credit agreement before they are closed.

A debt settlement plan, in which you agree to repay a portion of your unpaid debt, modifies or cancels the original credit agreement. When the lender Closes the account due to a change in the original contract (as is often the case after settlement is complete), your score is lowered. Other lenders will likely take note and be wary of giving you credit in the future as well.

Nonetheless, it is possible that reducing the debt burden will lead to a subsequent drop in your credit score. The top credit card account balances and late or missed payments have probably already reduced it somewhat. If debt settlement is the path to a healthier financial future for you, this should be considered.

Let’s take a look at the process in more detail.

Will Paying Off Your Old Debt Increase Your Credit Score?

How Debt Settlements Work

As you know, your credit report is a snapshot of your financial past and your present. It shows the history of each of your accounts and loans, including the original terms of the loan agreement, your outstanding balance amount against your credit limit, and whether payments were made on time or on time. no. Each late payment is recorded.

You can negotiate a debt settlement agreement directly with your lender or seek help from a debt settlement company. Either way, you agree to only repay a portion of the outstanding debt. If the lender agrees, your debt is reported to credit bureaus as “payment paid”.

Although this is better for your report than a to cushion-it may even have a slightly positive impact if it erases delinquency– it does not have the same meaning as a note indicating that the debt has been “paid as agreed”.

The best case is to negotiate in advance with your creditor so that the account is declared “paid in full” (even if it is not). It doesn’t hurt your credit score as much.

What kind of debt do I have to pay off?

Since most creditors are unwilling to settle debts that are up to date and serviced with timely payments, you had better try and come to an agreement for older and seriously overdue debts, perhaps something that has already been taken to a collection service. It sounds counterintuitive, but in general your credit score drops less as you become more delinquent in your life. Payments.

However, keep in mind that if you have an unpaid debt that was sent to collectors over three years ago, paying it off through debt settlement could reactivate the debt and make it appear like a running collection. Make sure you understand your creditor before finalizing any deal.

A debt settlement stays on your credit report for seven years.

As with all debt, larger balances have a proportionately greater impact on your credit score. If you are settling small accounts, especially if you are aware of other larger accounts ready—Then the impact of a debt settlement may be negligible. Plus, settling multiple accounts hurts your score more than settling just one.

Debt Settlement vs Staying Up to Date

In your credit history, the most important weight is given to the history of payments, the current accounts having the most impact.If you are behind on other debts, it’s important to try to keep a newer one first. current account in good standing before attempting to rectify a long overdue account.

For example, if you have a car loan, mortgage, and three credit cards, and one of them is over 90 days past due, don’t try to settle that debt at the expense of other obligations. An unpaid account is better than having late payments on multiple accounts.

30%

The average amount of savings a consumer sees after debt settlement, according to the American Fair Credit Council.

It will also seem counterintuitive, but the stronger your credit score is in front of you. negotiate a debt settlement, the greater the fall. The Fair Isaac Corporation, the group behind the FICO score (the most common type of credit score) gives a scenario where a person with a credit score of 680 (who is already overdue on the credit card) would lose between 45 and 65 points after the payment is settled. debt for a credit card, while a person with a credit score of 780 (with no other late payments) would lose between 140 and 160 points.

The bottom line

Focused towards suffering debt can be scary, and you may want to do whatever you can to get out of it. In this situation, a debt settlement arrangement seems to be an attractive option. From a lender’s perspective, it may be better to arrange for payment of some, but not all, of the outstanding debt than to receive none. For you, a debt settlement has an impact on your credit report, but it can help you fix problems and rebuild.

Take into account opportunity cost not to pay off your debt. If you don’t settle for it, your score isn’t affected right away. However, non-payment can lead to late payments, defaults and collection attempts by credit agencies. These scenarios can end up hurting your score further in the long run. Occasionally, debt relief is the best option, but a clean slate is almost always good.

Think about taxes. The IRS generally considers the forgiven or forgiven debt as taxable income.Ask your tax advisor about the possible tax implications of a debt settlement.


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Biden considers executive action to provide federal student loan debt relief – FOX23 News

WASHINGTON – President Joe Biden plans to take executive action to provide federal student loan debt relief to borrowers nationwide as he continues to call on Congress to take action amid the pandemic of coronavirus in progress.

>> Read more trending news

In a Twitter post Thursday, White House press secretary Jen Psaki said members of Biden’s team were considering his options.

“The president continues to support the cancellation of student debt to provide relief to students and families,” she wrote. “Our team is examining if there are any steps he can take through executive action and would welcome the opportunity to sign a bill sent to him by Congress.”

The announcement came after Psaki told a press conference that Biden “is calling on Congress to draft the proposal.” Previously, Biden had indicated that he was not sure that as president he would have the power to write off large swathes of student debt.

“I think it’s pretty questionable,” he said in December, according to Politico. ” I’m not sure of it. I probably wouldn’t do that.

A group of Democrats, including Senate Majority Leader Chuck Schumer of New York and Senator Elizabeth Warren of Massachusetts on Thursday urged Biden to use executive action to cancel $ 50,000 from the Federal student loan debt for each borrower. They presented the student loan forgiveness as a social justice issue that would particularly affect students of color and help close the country’s racial wealth gap.

“There’s not much the president can do with the stroke of a pen that will boost our economy more than canceling $ 50,000 in student debt,” Schumer said Thursday at a conference. press with Warren and other progressive lawmakers pushing for student debt relief. “It’s one of those things the president can do on his own.”

Republicans have opposed proposals to write off student loan debt, saying it unfairly shifts the burden from borrowers to taxpayers.

In a hearing Wednesday with Biden’s choice to lead the Department of Education, Sen. Richard Burr, RN.C., urged the president not to pursue the cancellation of student loan debt, which he called it “dangerous and reckless”. Instead, he called on Biden to work with Senators to pass legislation “that dramatically simplifies student loan repayment options, allows borrowers to pay whatever they can reasonably afford, capped at 10 percent of their discretionary income, and having their loan canceled after 20 years. “

Economists have also questioned whether a decision to write off student debt would have the desired effect. A analysis published in October by the Brookings Institution found that nearly 60% of unpaid student debt was owed by people with household income over $ 74,000, while those with the lowest incomes accounted for just under 20% of the debt unpaid.

In one editorial published in NovemberJames Looney, a former Treasury Department official and senior researcher at the Brookings Institution, said that forgetting $ 50,000 in student loan debt for each borrower would cost around $ 1,000 billion and would be one of ” largest transfer programs in US history “.

“And its most important effect would be to improve the finances of workers who have graduated from college, who have already tended to be winners in an economy marked by ever-growing inequalities,” he wrote.

Calls for debt cancellation have escalated after years of rising tuition fees that have contributed to the increase in national student debt. More than 43 million Americans owe a total of $ 1.6 trillion in federal student loans, The Wall Street Journal reported.

In an effort to provide relief shortly after last year’s pandemic, the administration of former President Donald Trump suspended federal student loan payments and set interest rates at zero percent. When he took office, Biden extended the moratorium until at least September 30.

The Associated Press contributed to this report.



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Covid19: Government has R300 million available for rent relief assistance

Government housing in Langa, Cape Town. (Getty)

  • R300million was made available for rental assistance during the nationwide lockdown.
  • Deputy Minister of Human Settlements, Water and Sanitation Pam Tshwete said Covid-19 had disrupted budgets in all departments.
  • The provincial emergency grant was increased from Rand 377 million to Rand 672 million.

The government reallocated R300 million for rent relief assistance to social housing institutions during the nationwide shutdown.

This was revealed on Wednesday by the Department of Human Settlements in a hybrid session of Parliament’s portfolio committee on human settlements, water and sanitation.

The department also presented its adjusted budget for fiscal year 2020/21.

READ | SA facing the double storm of Covid-19 and hunger

Deputy Managing Director Joseph Leshabane said an additional R300 million has been reallocated to provide debt relief to borrowers in the affordable rental housing sector in the form of a grant to National Housing Finance Corporation.

“We have introduced two specific additions to our entity transfers. We are introducing an allocation of R300 million for affordable rent relief and another R300 million for affordable rent relief for tenants who do not stay. in social housing. This is a work in progress, and we will come back to the committee once this framework is finalized, “he said.

Leshabane said more money had been allocated for emergency housing.

“What you will see is the provincial emergency grant which has increased from Rand 377 million to Rand 672 million.

“Again, this is a very important adjustment because for us emergency housing under these circumstances has become quite central in the modernization of informal settlements,” he said.

Disturbances

Leshabane also added that consultations with the National Treasury are ongoing.

“On our schedule, we are on schedule to finalize our consultations, including the Treasury, by the end of this month.

“I say this because we now need to go back and review all the relief measures that are now available for households, UIF and other issues.

“Then we had to reconcile all of that to avoid a double-dipping scenario; it turned out to be much more intense than we had originally planned, but we have the proposal and the project is on the table. There is still work to be done. ,” he said.

READ | Lockdown: Dlamini-Zuma asks SCA for leave to appeal High Court ruling

MEPs also voiced concerns about the reduction of R377 million in the land title restoration grant.

Deputy Minister of Human Settlements, Water and Sanitation Pam Tshwete said Covid-19 had disrupted budgets in all departments.

“We have to do things differently in the future because of Covid-19,” she said. “We take note of the fact that some budget cuts will have a negative impact on us.

“We fully understand that such cuts were made necessary by Covid-19 and we will do what we can with what we have. We spend what we are given.

“We will be monitoring municipalities and provinces, particularly on the issue of title deeds. We know that provinces do not always use this grant.”

The committee also called on the department to speed up the modernization of informal settlements.


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BoT adopts targeted, non-generalized debt relief measures for SMEs

BoT adopts targeted, non-generalized debt relief measures for SMEs

Measures postponed until next June for companies that have not fully recovered

Roong Mallikamas, Deputy Governor for Financial Stability and Corporate Strategy Group, Bank of Thailand.

The Bank of Thailand has put in place targeted debt moratorium measures, which are expected to end next June, for small and medium-sized enterprises (SMEs) with a line of credit of less than 100 million baht and with debts. difficulties in servicing their existing debts.

The targeted measures will end on June 30, 2021. This will only apply to the targeted SMEs that cannot cope with the repayment of loans to financial institutions due to the full non-recovery of business operations.

The central bank implemented large-scale debt relief measures on April 23 to help SMEs recover from the fallout from the pandemic, but the measures were due to end on October 22.

Roong Mallikamas, deputy governor responsible for financial stability and corporate strategy, said the central bank would let banks and non-bank companies negotiate with debtors on whether they can repay their debts normally or whether they prefer to continue. the debt moratorium program for another six months.

Banks and non-bank companies will need to collect information on SMEs for the extended debt moratorium by December of this year.

The value of debtors receiving debt relief measures in the formal banking system stands at 6.89 trillion baht, of which 1.35 trillion baht is allocated to SME loans of 1.05 million accounts.

Of the 1.35 trillion baht, 950 billion baht from 319,000 accounts representing 79% of total SME loans are classified as SME borrowers with contracted debt of less than 100 million baht. Commercial banks and non-bank companies are the creditors of this portion of the SME loan.

Of the 950 billion baht, 57 billion baht or 6% of SME loans from commercial banks and non-bank companies are classified as SME borrowers that banks and non-bank companies were unable to contact. .

The majority of SME borrowers say they intend to service their debts normally when the debt moratorium program expires next Thursday, according to the central bank.

“The Bank of Thailand has asked financial institutions to try to contact the 6% of debtor SMEs,” Ms. Roong said. “They will have more than two months or until the end of December to find them [debtors] and offer the option of a debt moratorium for another six months or to service their debts normally. “

She said financial institutions may also consider adjusting debt service terms for clients on a case-by-case basis to avoid an increase in non-performing loans, as well as adopting other tools such as reduced interest on credit cards and personal loans and the suspension of installments.

Borrowers will be able to resume repaying the full amount when the situation returns to normal, Ms. Roong said.

“The Bank of Thailand has been monitoring the situation closely and expects there will not be many defaults in a very short period of time. [cliff effect] after the end of the debt moratorium program, “she said.” This is because debtor SMEs whose creditors are specialized financial institutions, with loans totaling 400 billion baht, will continue to be under the debt moratorium regime for another six months. The majority of debtor SMEs, which owe a total of 950 billion baht to commercial banks and non-bank companies, also intend to repay their debts. “

The main reason for targeted debt moratorium measures, as opposed to general measures, is to avoid long-term negative repercussions, Roong said.

Debtors still bear the interest charges during the debt moratorium, while targeted measures are a way of discouraging moral hazard, as some debtors, who have not been significantly affected by the crisis, may choose to opt out. seize this opportunity to delay the repayment of the debt.

The longer period of the debt moratorium will also negatively affect financial stability, with an estimated cash loss of baht 200 billion resulting from the suspension of principal and interest repayments, Roong said.

With the relaxed lockdowns, each line of business has resumed operations, albeit at a varying pace.

Companies linked to beverages, agriculture, household appliances and petrochemicals have experienced a good recovery, according to the central bank.

In contrast, tourism-related businesses have recovered slowly from pre-crisis activity.


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