Looming pain for borrowers as loan relief ends
- The CBK said March 2 marks the end of the period for banks to restructure loans.
- Borrowers who still have restructured loans outstanding have until June 3 to regularize them.
The Central Bank of Kenya (CBK) said March 2 marks the end of the period allowing banks to restructure loans from borrowers affected by the Covid-19 pandemic.
Policymakers unveiled the initiative to help struggling borrowers in March last year at the onset of the coronavirus crisis, helping to partially cushion the economy from the shock of the impact of the pandemic.
Economic growth slowed to 0.6% last year, according to early estimates, well below the government’s earlier forecast of 6.2%, as the pandemic hit tourism, suppressed exports and eroded jobs . Official data for the entire year is expected next month.
The banks had restructured loans worth 569.3 billion shillings at the end of February, the CBK said in a statement.
This represented 19% of total loans, after dropping 57% of total loans at the height of the crisis, he added.
Borrowers who still have restructured loans outstanding will have until June 3 to regularize them, the regulator said.
The loan relief initiative is one of the latest stimulus policy measures to be unwound by the government.
Authorities reimposed fees on transfers of small amounts of money by cellphones late last year, after removing them in March to encourage cashless transactions and curb the spread of the virus.
In January, the government also rolled back wage and income tax cuts, unveiled last April to support demand in the face of economic shocks caused by the pandemic.
Kenya, which has so far reported 122,040 cases of Covid-19 infections and just over 2,000 deaths, is currently in the throes of a third wave of infections, which is stretching its health facilities.