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Credit holidays. Who will be able to benefit, how much will they cost? Piotr Patkowski, deputy finance minister, comments

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Credit holidays in 2022 and 2023 and preparation of a replacement for the WIBOR indicator. These are solutions that were included in the governmental project on which work is underway in the Sejm. – The government’s stance on tightening the conditions for credit holidays is negative and it will be so at further stages of the legislative process – Deputy Finance Minister Piotr Patkowski said in the Sejm on Wednesday. The cost of credit holidays in the shape proposed by the government may amount to approximately PLN 20 billion.

On Wednesday, in the Sejm, a meeting of the standing subcommittee for financial institutions was held. government bill on crowdfunding for business ventures and assistance to borrowers. The Sejm subcommittee recommends the adoption of the draft with amendments.

The meeting was attended, among others, by Deputy Minister of Finance Piotr Patkowski. – As not only the deputy finance minister, but also a full member of the FSC, I would like to say that the FSC is at least a quarter, but I think that the BFG (Bank Guarantee Fund – ed.) And the National Bank of Poland (Narodowy Bank Polski – ed.) Will confirm this, We discussed this project very much and worked it through and we believe that it is a reasonable compromise and, above all, a socially needed project and we present it to the high committee in this version – said Patkowski.

Earlier, during the subcommittee meeting, the Polish Bank Association called for the FSC to issue a binding position on the draft. The FSC includes the National Bank of Poland, the Polish Financial Supervision Authority, the Bank Guarantee Fund and Ministry of Finance.

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Credit holidays

The bill provides for the introduction of the so-called credit holidays in 2022 and 2023. As announced, the borrower will be able to use this solution for two months in each of the last two quarters of 2022 and for one month in each quarter of 2023.

Representatives of the Polish Financial Supervision Authority and the Bank Guarantee Fund informed during the subcommittee meeting that they pointed out to the Ministry of Finance that the credit holidays should be more “targeted” than indicated in the government bill, but they approach the legislator’s approach with understanding.

The deputy finance minister said that “the government’s stance on tightening the conditions for credit holidays is negative and it will be at further stages the legislative process“We simply consider it as socially unjustified and incorrect,” Patkowski stressed. As he added, the government believes that the premise of one loan for its own purpose included in the draft “is sufficient”.

Patkowski pointed out that the shape of the provisions on credit holidays was long discussed by the government. As he indicated, two restrictions were introduced, “which have already caused great social dissatisfaction in the form of excluding loans in a currency other than zloty or indexed to the zloty currency from the holidays”. – Second – that this loan can be for one purpose only and only if the loan is taken for own housing purpose – added the deputy head of the Ministry of Finance.

NBP doubts

In the opinion of the government bill, the NBP wrote that the proposals of support for some borrowers may be justified, but “they should be addressed only to those who experience real problems with paying off their liabilities”. Doubts of the central bank are caused by the lack of a condition that makes the possibility of using them dependent on the borrower’s financial situation or his situation on the labor market, as is the case in the so-called statutory credit holidays introduced in connection with the pandemic.

Moreover, the NBP assessed that the introduction of unconditional credit holidays could hinder the pursuit of a permanent reduction inflation.

The cost of credit holidays

The cost of credit holidays as proposed by the government may amount to around PLN 20 billion. – As for the costs (credit holidays – ed.) And their accounting treatment. The estimates made by various institutions by the safety nets are relatively convergent, and we are talking here about the amount of about PLN 20 billion. This program would cost the banking sector as much in two years, said Marcin Mikołajczyk, deputy chairman of the Polish Financial Supervision Authority during the session of the parliamentary subcommittee.

– The talks with auditors and banks show that most likely the entire cost should be recognized this year, in the first year of the program being in force – he added.

Mikołajczyk noted that “it is possible to imagine” a situation in which banks together with auditors find a model that will relate to the universality of using the vacation program and thus their cost can be spread over time in accounting, while it would be individually settled between the auditor and bank.

Replacement of the WIBOR indicator

As announced by the government, a new loan interest rate is also to be introduced in place of WIBOR. At the same time, the project includes a solution in the event of inability to designate a replacement. The POLONIA reference rate is to be a reserve option. The change is planned from January 1, 2023.

– First of all, POLONIA itself will not be a substitute, but an indicator based on POLONIA. (…) If we were to use this indicator on the basis of POLONIA, it will obviously be the role of the NBP, which will have to make appropriate adjustments and will calculate and publish the rate resulting from the calculation of the percentage composed of the POLONIA index – Patkowski said on Wednesday.

In its opinion, the central bank indicated that replacing the 3M and 6M WIBOR forward indices with the POLONIA index would weaken the operation of the monetary transmission mechanism. In the current conditions, such a change, in the opinion of the NBP, could reduce the impact of the interest rate increases. to curb inflation.

WIBOR and the bank’s margin are components of the interest rate on loans. Some banks use the WIBOR 3M (three-month) rate, which means that the mortgage interest rate is updated every three months from the moment the loan is disbursed. In the case of WIBOR 6M (six-month), the interest rate is updated every six months. The above rates include likely rate increases or cuts that may occur during this period.

WIBOR 3M is currently 6.59 percent, WIBOR 6M – 6.79 percent, and the POLONIA rate is 5.46 percent. Meanwhile, during the May meeting, the Monetary Policy Council decided to raise the reference rate to 5.25 percent.

Main photo source: Shutterstock

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