Written Answers Nos. 101-120
101. Deputy Seán Haughey asked the Minister for Finance if the impact of a hard or no-deal Brexit on the economy here has been revised and updated by his Department taking into account the impact the Covid-19 pandemic has already had on the economy; and if he will make a statement on the matter. [6276/20]
View answerThe Stability Programme Update sets out the latest macroeconomic and fiscal outlook, taking into account the impact of COVID-19. The Irish economy is expected to contract by 10.5 per cent this year.
Economic activity will gradually recover in the second half of the year, picking up momentum with growth of 6 per cent next year. In relation to Brexit, this is based on the assumption of a free-trade agreement being concluded between the EU and the UK at the end of the transition period in December this year.
I am satisfied that the existing analysis in the joint research by the Department and the ESRI, published in March last year, broadly captures the range of possible future relationships between the EU and the UK.
The analysis included a free trade agreement (of which there could be many forms), and a trading relationship under World Trade Organisation (WTO) frameworks. The impacts of these were modelled and estimated in the joint research.
Under these scenarios, over the medium-term the level of GDP would be of the order of between 1.9 and 3.3 per cent lower, respectively, compared to a situation where the UK remains in the EU. However, the impacts would expected to be front-loaded.
The negative impacts will be most severely felt in those sectors with strong export ties to the UK market – such as the agri-food, manufacturing and tourism sectors and also SMEs generally – along with their suppliers. The impact will be particularly noticeable outside the main cities.
My Department will continue to monitor developments with respect to the future relationship, and will update the macroeconomic and fiscal projections to take account of any developments alongside Budget 2021.
102. Deputy Robert Troy asked the Minister for Finance if he has engaged with the banking sector to temporarily remove the current fees charged to businesses for the use of contactless payment (details supplied). [6311/20]
View answerThe Deputy will aware that card payments, and in particular contactless payments, are being promoted in order to support public health policy at this time.
Fees for the acceptance of card transactions are charged to retailers by their acquirer, who manages the account and relationship between a retailer and the various card schemes. All acquirers in Ireland are independent commercial entities and I have no statutory role in relation to the charges applied by acquirers.
Acquiring is a competitive market and retailers could stand to benefit from shopping around for lower rates from acquirers for accepting card payments.
103. Deputy Eoin Ó Broin asked the Minister for Finance if residents of direct provision centres that were in taxable employment prior to the Covid-19 restrictions being put in place are eligible to participate in the wage subsidy scheme; and if not, the reason therefor. [6314/20]
View answerThe Temporary Wage Subsidy Scheme (TWSS) makes no distinction between employees by reference to their place of residence. All eligible employees of qualifying employers are entitled to the wage subsidy.
The TWSS is provided for in section 28 of the recently enacted Emergency Measures in the Public Interest (Covid-19) Act 2020 (The Act). Of necessity, the underlying legislation and the scheme itself have been developed very quickly, having regard to the objective of getting much needed assistance to employers and employees, where businesses have been seriously affected by the pandemic and the necessary restrictions introduced to fight the spread of the Covid-19 virus.
The TWSS builds on data returned to Revenue through its real-time PAYE system. It must be accepted that the underlying legislation and the scheme itself cannot be tailored to meet every individual unique set of circumstances for either employers or employees. The core principles of the scheme are that
- the business is suffering significant negative economic impact due to the pandemic,
- the employees were on the payroll at 29 February 2020, and
- the employer had fulfilled its PAYE reporting obligations for February 2020, by 15 March 2020 (which date was recently extended to 31 March 2020 by Revenue concession and subject to conditions).
The TWSS is predicated on the employer wanting to keep the employees on the payroll and to retain them until business picks up. The amount of the subsidy for each employee is calculated based on the average net weekly pay reported for January and February 2020.
There is no distinction made with regard to the subsidy amount, on the basis of whether the business has closed due to the restrictions brought in by the Government, or whether the business has continued to trade with employees continuing to work part-time or full time with similar hours as before the Covid-19 pandemic.
104. Deputy Michael McGrath asked the Minister for Finance if the Revenue Commissioners has scope under the EU Commission Decision C (2020) 2146 of 3 April 2020 to extend the zero rate of VAT on medical supplies to an organisation such as dentists and shop owners on condition that the supplies are distributed free of charge by the organisation to persons affected by or at risk from Covid-19 or involved in combating the Covid-19 outbreak; and if he will make a statement on the matter. [6388/20]
View answer105. Deputy Michael McGrath asked the Minister for Finance if he will publish the request he made to the Revenue Commissioners to apply a zero rate of VAT on medical supplies under EU Commission Decision C (2020) 2146 of 3 April 2020; the scope of the request; if it included organisations such as shops and dentists; and if he will make a statement on the matter. [6383/20]
View answer112. Deputy Sean Fleming asked the Minister for Finance if he will consider introducing the appropriate changes to rules and regulations in relation to the VAT at 23% and the import duty at 6.3% which applies to the import of face masks (details supplied); and if he will make a statement on the matter. [6558/20]
View answerI propose to take Questions Nos. 104, 105 and 112 together.
The European Commission Decision C(2020)2146, adopted on 3 April 2020, provides for the importation of goods to fight the effects of COVID -19 from outside the European Union without the payment of VAT or Customs Duty from January 2020. Such relief is permitted where the goods are imported by or on behalf of State bodies, public bodies and other bodies governed by public law, disaster relief agencies and organisations approved by Revenue including organisations regulated by the State and involved in the care, support and treatment of people at risk of COVID-19 and there is no scope to extend this to other sectors. The goods must be distributed or made available free of charge to the persons affected by or at risk from or involved in combating the COVID-19 outbreak by the bodies and organisations referred to above. The relief is scheduled to end on 31 July 2020 but there is provision for an extension if this is required following a review and consultation with Member States.
Following a request from my Department, Revenue has also implemented, on an administrative basis, the application of the zero rate of VAT to the domestic supply of personal protection equipment including facemasks, ventilators, thermometers, hand sanitisers and oxygen as necessary to combat COVID-19 when supplied to hospitals, nursing homes, GP practices and the like, for use in the delivery of COVID-19 related health care services to their patients. This concessionary treatment will apply until 31 July, subject to review. The scope of the relief corresponds with the relief on the importation of these goods by the bodies specified in the Commission Decision.
The extension of zero rating to supplies of those specified medical supplies to dentists and shop owners and indeed other sectors and businesses would require a change in legislation to define the scope of, and provide a legal basis for, the desired zero rating. In addition it is important to stress that a business, such as a shop, which is registered for Irish VAT and incurs VAT in relation to goods which will be used for the purposes of a taxable business is entitled to reclaim the VAT incurred through their VAT return.
106. Deputy Niamh Smyth asked the Minister for Finance if there is tax relief or grants or supports available to businesses that will need to incur costs to implement social distancing measures in the interest of public health to reopen their doors due to Covid-19; and if he will make a statement on the matter. [6415/20]
View answerWhen computing the amount of profits or gains to be charged to corporation tax, a company is, in general, entitled to deductions in respect of revenue expenditure wholly and exclusively incurred for the purposes of its trade as provided for in section 81 of the Taxes Consolidation Act, 1997.
I am advised by the Revenue Commissioners that where a business incurs costs to implement social distancing measures for the purposes of the trade or profession concerned, those costs will be tax-deductible under the general income tax and corporation tax rules.
Capital expenditures are not immediately tax-deductible for the year of such expenditure. However, if a business were to incur capital expenditure on plant and machinery to implement social distancing measures capital allowances could be claimed on that expenditure. These capital allowances would provide an annual deduction from income, of 12.5% of the expenditure, for 8 years.
The Government has announced a range of measures designed to support businesses during the COVID-19 crisis. Details of which are available at: www.gov.ie/en/publication/fe8f00-government-outlines-further-measures-to-support-businesses-impacted-/.
The Government is fully aware of the unprecedented impact that the Covid-19 corona virus is having on business and people’s livelihoods. In addition to support measures currently in place, my officials are continually examining a range of possible measures to ensure that the economy is in a position to recover while maintaining a stable tax base.
107. Deputy Mairéad Farrell asked the Minister for Finance the estimated deficit the State will have accrued in public finances as a direct result of the Covid-19 pandemic; his views on whether Ireland will be necessitated to access funds through the European Stability Mechanism to meet such a deficit; his further views on whether the flexibility of the European Central Bank to deviate from capital key purchase targets and acquire specific quantities of Eurozone countries’ bonds should be exploited in the coming months to fund an economic recovery and ensure the State returns to growth in 2021; and if he will make a statement on the matter. [6424/20]
View answerThe Government published its Draft Stability Programme Update on 21 April. This set out an updated economic and fiscal scenario, for this year and next, incorporating the impact of the Covid-19 pandemic. The necessary fiscal cost of providing short-term support to the private sector will be significant. A general government deficit of €23 billion was projected for this year.
The cost of these measures was estimated at €6.8 billion, with the most important being the Pandemic Unemployment Payment and the Temporary Wage Subsidy Scheme. These are in place to support those who have lost their employment due to the restrictions and to help maintain the worker-employer relationship.
Following the introduction of further measures aimed at supporting enterprises my Department published a document in order to update the suite of measures detailed in the SPU. This document is available here: www.gov.ie/en/publication/4d2b1f-covid-19-policy-response-overview-of-economic-support-measures/.
The Pandemic Stabilisation and Recovery Fund, within the Ireland Strategic Investment Fund (ISIF), will utilise up to €2 billion of ISIF’s readily available capital to invest in medium and large enterprises. This will not give rise to any additional Exchequer costs nor require any further borrowings to finance it.
The starting position is favourable: a general government surplus was delivered last year; the Rainy Day Fund (RDF) was established; at end-April the NTMA had c.€20 billion of cash - pre-funding this year’s redemptions; and there are no bonds maturing next year.
In light of the updated fiscal position, including the Exchequer Borrowing Requirement of €15.6 billion, the National Treasury Management Agency (NTMA) has announced a revised bond funding range of €20 billion to €24 billion for the year.
The NTMA has issued €12.5 billion in bonds so far this year. This includes two new bonds maturing in 2027 and 2035. There are further bond auctions scheduled this quarter. The NTMA also plans to increase Treasury Bill and Commercial Paper Issuance. Overall short term issuance is expected to increase by a further €5 billion by year end.
The first instalment of the National Asset Management Agency (NAMA) surplus of €2 billion was due to be made this year and had already been accounted for in the Budget 2020 fiscal projections.
Given the scale of the impact on the economy of Covid-19 it is envisaged that the RDF drawdown, when it happens, will be for the current value of the Fund i.e. €1.5 billion less expenses incurred by the NTMA in managing the Fund. Drawdown of the RDF means that the Exchequer Borrowing Requirement for 2020 is c. €1.5 billion less than would otherwise be the case. The rationale for having such a Fund – for use in exceptional circumstances such as these – has been strengthened by this crisis.
Due to recent successful debt issuances by the NTMA, there is no immediate need for drawdown and no specific date as to when drawdown will happen. Last month the NTMA successfully borrowed €6 billion in the bond market for 7 years at less than ¼ of 1 percent.
The interest rate environment remains accommodative owing to European Central Bank policy action and the introduction of its €750 billion Pandemic Emergency Purchase Programme (PEPP).
In relation to the Deputy’s question on the actions of the European Central Bank (ECB), I have previously welcomed its monetary policy response to the pandemic, and particularly the PEPP and greater flexibility in its refinancing operations. I expect banks to use the positive effects of these measures to support the economy and I know that the Central Bank of Ireland shares this view. In terms of changes to ECB operations, I should point out that Article 130 of the Treaty for the European Union sets out that Government must respect the independence of the European Central Bank and not seek to influence its decisions.
Finally, I agreed with my fellow Euro–area finance Ministers the features and standardised terms of the European Stability mechanism (ESM) Pandemic Crisis Support instrument. This ESM instrument has been tailored to meet the challenges of this crisis and will provide a safety net of c.€240 billion for Euro-area Member States.
I consider this instrument to be an important and credible safety net for the euro area, both in terms of its magnitude and availability to all euro area Member States, however, I do not envisage that Ireland will avail of this instrument for the reasons I have already set out.
109. Deputy Seán Haughey asked the Minister for Finance if the tax credit given to the carers of incapacitated persons will be increased in view of the fact that carers are providing full-time care and attention and will have no entitlement to a contributory State pension in due course; and if he will make a statement on the matter. [6434/20]
View answerThere are a number of tax credits and reliefs available to individuals who are carers of incapacitated persons.
The Incapacitated Child Tax Credit is a tax credit of €3,300, which can be claimed by a person in respect of a child who is permanently incapacitated either physically or mentally from maintaining himself or herself and had become so before reaching 21 years of age or finishing full-time education. More information is available on Revenue’s website: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-05.pdf.
The Home Carer Tax Credit is available to married couples or civil partners that are jointly assessed, where one spouse or civil partner stays at home to take care of a dependent person. Its current value is €1,600. The carer spouse or civil partner may earn up to €7,200 per year without affecting the amount of the credit awarded. Where this income exceeds €7,200, the amount of credit available is reduced by one half of the excess over €7,200, subject to a maximum income limit in 2020 of €10,400. The Home Carer Tax Credit has been increased in each of the last five Budgets. More information is available on Revenue’s website: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-29.pdf.
The Dependent Relative Tax Credit is a tax credit of €70, which can be claimed by an individual who maintains, at his or her own expense, a relative, or a child, who is unable to maintain himself or herself. This credit cannot be claimed in conjunction with the Incapacitated Child Tax Credit and is subject to a cap on the income of the dependent relative. Further information on this credit can be found at the link: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-27.pdf.
The Single Person Child Carer Tax Credit is a tax credit of €1,650, which is available to a single parent (whether widowed, separated, deserted or a single parent) with a dependent child who is under 18 or, if over 18, is an incapacitated child who satisfies the Incapacitated Child Tax Credit criteria. Detailed guidance on this credit is available at the link: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-41.pdf.
In addition, income tax relief is available for certain health expenses, including visits to the doctor, medicines, nursing care in the patient’s home (in certain circumstances), nursing home fees, expenditure in respect of children with life threatening illnesses, kidney patients’ expenses, mileage for individuals who need to travel for treatment and certain medical appliances. More information on tax relief for health expenses is available at the link: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-12.pdf.
I have no plans to make any changes to the abovementioned tax credits at this time.
The question of entitlement to the State Contributory Pension is a matter for the Minister for Employment Affairs and Social Protection.
110. Deputy Thomas Pringle asked the Minister for Finance the estimated amount of revenue that would be generated if the betting intermediary duty rate increased from 25% to 30%; and if he will make a statement on the matter. [6515/20]
View answerI am advised by Revenue that the additional amount of revenue that could be generated if the betting intermediary duty rate increased from 25% to 30% is estimated at €0.55m in a full year, potentially bringing the total amount for this duty to €3.3 million in a full year.
111. Deputy Thomas Pringle asked the Minister for Finance the dividend paid to the Exchequer by each commercial State company in 2018 and 2019, in tabular form; and if he will make a statement on the matter. [6516/20]
View answerDetails of the dividends paid to the Exchequer in 2018 and 2019 by each commercial State body are provided in the table below.
Information on such dividends and receipts paid to the Exchequer are published on a monthly basis by my Department in the Fiscal Monitor which is available at www.gov.ie/en/collection/bf14dc-fiscal-monitors/.
|
Company |
2018 € |
2019 € |
|
Coillte Teoranta |
15,000,000 |
13,000,000 |
|
Dublin Airport Authority |
37,400,000 |
40,000,000 |
|
Dublin Port Company |
12,173,000 |
4,100,000 |
|
Eirgrid |
4,000,000 |
4,000,000 |
|
Electricity Supply Board |
33,056,621 |
41,199,071 |
|
Ervia |
139,089,000 |
139,404,000 |
|
Irish Aviation Authority |
19,458,000 |
19,524,000 |
|
Port Of Cork Company |
714,000 |
250,000 |
|
Port of Waterford |
0 |
330,897 |
|
Shannon Foynes Port |
300,000 |
350,000 |
|
Vodafone Group |
0 |
1 |
|
Total |
261,190,621 |
262,157,969 |
113. Deputy Anne Rabbitte asked the Minister for Finance if recipients of the Covid-19 pandemic unemployment payment will be subjected to tax on the payments at a later date; if no decision has been made, when a decision will be made; and if he will make a statement on the matter. [6566/20]
View answerPayments made under the Pandemic Unemployment Payment (PUP) Scheme are an income support and share the characteristics of income. Other income earners in receipt of comparable “normal wages” are taxable on those wages. In the interest of equity, therefore, payments made under the PUP scheme are subject to income tax. However, tax will not be collected in real-time while the scheme is in operation. In the case of the PUP, the taxation position will follow the general taxation rule for social welfare payments and, thus, while liable to income tax, the payments will be exempt from PRSI and the Universal Social Charge. This will be the case whether the recipient of the PUP is either a former PAYE worker or a person who was previously self-employed.
While not liable to tax in real time under the PAYE system, the liability to tax on payments under the PUP scheme will instead normally be determined by way of review at the end of the tax year. I am advised by Revenue that when an end of the year review takes place, it may be the case that an employee’s unused tax credits will cover any further liability that may arise as a result of taxation of PUP payments. Where this is not the case and should a tax liability arise, it is normal Revenue practice to collect any tax owing in manageable amounts by reducing an individual’s tax credits for a future year or future years in order to minimise any hardship. Additionally, if an individual has any additional tax credits to claim, for example, health expenses, this will also reduce any tax that may be owing. I have been assured by Revenue that they will be adopting a fair and flexible approach to collecting income tax due on payments made under the PUP scheme.
115. Deputy Michael McGrath asked the Minister for Finance if his attention has been drawn to the fact that certain insurers are increasing the insurance premium of persons whose NCT certificate is out of date as a result of the NCT test centres being closed due to Covid-19; if the matter will be addressed; and if he will make a statement on the matter. [6613/20]
View answer116. Deputy Michael McGrath asked the Minister for Finance if his attention has been drawn to the fact that certain insurers are using claims history information on a more granular geographic basis than before as a reason for increasing premiums; if the matter will be addressed; and if he will make a statement on the matter. [6614/20]
View answerI propose to take Questions Nos. 115 and 116 together.
At the outset you should note that neither I, as Minister for Finance, nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products or have the power to direct insurance companies to provide cover to specific individuals or businesses. This position is reinforced by the EU framework for insurance (the Solvency II Directive) which expressly prohibits Member States from doing so. Consequently, I am not in a position to direct insurance companies as to how they price their policies including whether they should use the two practices mentioned in the Deputies' questions.
On a general level, my understanding is that insurers will use a combination of rating factors in making their individual decisions on whether to offer cover and what terms to apply. For example, in relation to motor insurance, factors may include those such as the age of the driver and the relevant driving experience, as well as the age and type of vehicle, how the vehicle is used, the claims record, and the number of drivers. Insurers also price in accordance with their own past claims experience, and do not all use the same combination of rating factors, so as a result prices vary across the market. In addition to the above, it is important for the Deputies to appreciate that I am not in a position to compel insurers to disclose information such as actuarial data covering the geographic basis of claims history and how it affects the pricing of premiums.
The above said, in relation to the issue raised about increased premiums where NCT certificates are out of date due to the COVID 19 related closure of the NCT test centres, I would note that Insurance Ireland has previously indicated that most of its members have accepted the four-month extension period for NCT certificates. As such I expect that this commitment will be honoured by the sector and if it is not then I believe that would be contrary to the spirit of the earlier Insurance Ireland announcement. As I have said many times previously, the sector must treat their customers fairly.
Finally, my view is that it is now more important than ever for consumers to shop around on their insurance policies. The Competition and Consumer Protection Commission (CCPC), on its website, recommends that consumers get quotes from a number of insurance companies, including their current one. Their website also includes a car insurance shopping around checklist and other tips on cutting car insurance costs which may prove useful to consumers.
117. Deputy Ged Nash asked the Minister for Finance if employees enrolled in the TWSS will have non-statutory deductions automatically reapplied after exiting the scheme while remaining in employment; and if he will make a statement on the matter. [6619/20]
View answerThe Temporary Wage Subsidy Scheme (TWSS) is provided for in section 28 of the recently enacted Emergency Measures in the Public Interest (Covid-19) Act 2020). Of necessity, the underlying legislation and the scheme itself have been developed very quickly, having regard to the overarching, urgent Government objective of getting much needed assistance to employers and employees, where businesses have been seriously affected by the pandemic and the necessary restrictions introduced to fight the spread of the Covid-19 virus.
The intention of the TWSS is to maintain employees’ net income as close as possible to normal net income and to ensure that the employees receive the full subsidy payment value. Non-statutory payroll deductions, for example, credit union deductions, union fees, etc., are normally deducted from net pay after tax. Revenue guidance provides that employers should not apply the non-statutory payroll deductions from net pay, unless the value of the additional gross pay (employer top-up) exceeds the value of the deductions, or that the employer is doing so with the agreement of the employee.
I have been advised by Revenue that non-statutory deductions from pay are matters that are agreed between the employee and employer concerned and do not form part of the payroll submission reported by employers to Revenue. Therefore, it will be a matter for the employer and the employee concerned to agree to have non-statutory deductions reapplied to the employee payroll after exiting the TWSS.
118. Deputy Róisín Shortall asked the Minister for Finance if an issue (details supplied) regarding wedding insurance policies will be addressed; and if he will make a statement on the matter. [6636/20]
View answerAt the outset, I would like to express my sympathy for those whose wedding plans have been impacted by the COVID-19 pandemic. However, the Deputy should note that neither I, nor the Central Bank of Ireland, can interfere in the provision or pricing of insurance products, or their contractual terms, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept. This position is reinforced by the EU framework for insurance which expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or contractual terms and conditions of insurance products.
Whether an individual can make a claim in relation to the cancellation of their wedding due to COVID-19 will depend on the specifics of the individual policy. Whilst I strongly believe that insurers should treat their customers honestly, fairly and professionally and honour those elements of the policies covered, including wedding insurance claims, in line with the Central Bank’s Consumer Protection Code, it is important to note that neither the Government nor the Central Bank have any role in adjudicating on such matters.
Where a dispute occurs in relation to the interpretation of an insurance policy and the policyholder is dissatisfied with the service received by their insurer, including in relation to the situation mentioned in this question, then the appropriate channels for resolving the dispute must continue to be followed i.e. use of the Financial Services and Pensions Ombudsman (FSPO). The Deputy will be aware that the FSPO is a statutory official who acts as an independent arbiter of disputes which consumers may have with their insurance company or other financial service provider. The FSPO can be contacted either by email at info@fspo.ie or by telephone at 01-567-7000. I note that, in this instance, the individual referred to in the Deputy’s question intends to lodge a complaint with the FSPO and I believe this is the best way of resolving this matter.
119. Deputy Michael McGrath asked the Minister for Finance if all mortgage holders and business customers of the banks availing of a payment break as a result of Covid-19 will have the option of having the term of their loan extended in order that they do not face a rise in monthly repayments when they resume paying in view of the announcement of 11 May 2020 (details supplied); and if he will make a statement on the matter. [6664/20]
View answer126. Deputy Michael McGrath asked the Minister for Finance if the banks have now agreed that anyone availing of the Covid-19 break in loan or mortgage payments can now extend the loan term in order that their repayments are no higher; and if he will make a statement on the matter. [6817/20]
View answerI propose to take Questions Nos. 119 and 126 together.
As the Deputy will be aware, An Taoiseach, Leo Varadkar and I, along with the Minister for Business, Enterprise & Innovation, met with the Chief Executives of the five Irish major retail banks last week.
The Taoiseach emphasised the important role of the banking sector in supporting the gradual re-opening of the Irish economy by ensuring a flow of credit to businesses as they begin to trade again, in line with the government’s Roadmap for Re-opening Society and Business.
We welcomed the ongoing work of the banks in helping business customers and mortgage customers impacted by COVID-19 which included the initial three month payment-breaks that allowed households and businesses to defer some of their most significant outgoings. On 30 April, the members of the Banking and Payments Federation Ireland (BPFI) announced their intention to extend these payment breaks to six months for households and businesses which require it.
Business and mortgage customers will have the option of having the term of their loan extended so they do not face a rise in monthly repayments when they resume paying. Importantly, it will not affect customers’ credit rating, nor increase the burden on non-performing loans on the banks.
The Central Bank is focused on ensuring that extensions to COVID-19 related payment breaks operate in borrowers’ best interests and it has communicated its expectations to the BPFI that at the end of the agreed payment break, borrowers should be given the option to either:
i. repay the loan within the remaining term or
ii. extend the term of the loan.
This choice should apply for all loans and the impact of both options on the overall cost of credit and monthly repayments should be fully explained to the customer, noting that borrower circumstances and the appropriateness of each option will differ.
As part of their supervisory work, the Central Bank will monitor compliance with this expectation and take action, where their expectations are not met.
