Thursday, July 30
Mr. Miquel Dijkman, Lead Financial Sector Specialist, FinSAC, World Bank Group
Ms. Valeria Salomao Garcia, Senior Financial Sector Specialist, World Bank Group
On Thursday, July 30, JVI hosted a webinar on "Borrower Relief Measures in Europe and Central Asia."
Most countries in the ECA region have set up schemes with the objective of supporting borrowers whose repayment capacity has been negatively affected by COVID-19. In doing so, most countries have opted to leave banks some discretion in selecting eligible borrowers. Mr. Dijkman and Ms. Salomao Garcia stressed that borrower relief measures should be unwound as soon as circumstances allow. Policymakers thus need to prepare and communicate exit strategies, to develop a view on the circumstances in which the exceptional measures can be unwound. The presenters advised against a relaxation of regulatory definitions for NPLs and forborne exposures and changes to classification and provisioning requirements. Stretching regulatory definitions is likely to undermine market discipline and comparability within and across countries, distorts the veracity of financial information, and blur the distinction between borrowers negatively affected by COVID-19 and zombie borrowers.
The discussion was based on the following FinSAC policy note:
“Borrower Relief Measures in ECA Region” (English)
The webinar was opened by JVI Director Thomas Richardson, and moderated by Reiner Martin (JVI).
Reiner Martin, Lead Economist, JVI