Covid-19. Moratorium on Credit Facilities in Exceptional Circumstances Regulations, 2020 [L.N. 142 OF 2020]

Dr. Jean-Carl Abela [Associate at FSGM.Partners] ​

The COVID-19 pandemic outbreak has not only brought dire health consequences to the human race but has also adversely effected the world’s economy, with many experts predicting a rescission to take effect as a result of the strict measures taken by countries all around the world to limit the spread of the virus and eventually eradicate the virus completely.  

This current pandemic is formally recognised as a serious disturbance to the Maltese economy,  within  the  meaning  of  article  107  of  the  Treaty  on  the Functioning  of  the  European  Union,  which  as  a  consequence  also seriously threatens the financial stability in Malta.
The Maltese government, in a bid to aid economically vulnerable persons who have been materially affected by the exceptional circumstances brought about by COVID-19 and limit the economic impact, introduced Legal Notice 142 of 2020, which allows a temporary moratorium (suspension of a borrower’s repayment obligations) to be applied by credit and financial institutions (ex. Banks) on credit facilities, to persons who will likely face liquidity shortages and difficulties in honouring their financial and other commitments in a timely manner.

The definition of a credit facility under the Directive is wide ranging. The following is a list of examples of eligible facilities:

• Mortgages
• Business and commercial loans
• Buy-to-let loans
• Personal loans
• Bullet loans
• Overdrafts
• Bills of exchange (including endorsed pour aval),
• Promissory notes
• Guarantees
• Indemnities
• Acceptances

The duration of the moratorium shall be for a period of six (6) months, however, the Minister may, after consultation with the Minister for Finance and Financial Services, extend the duration of the moratorium by notice published in the Gazette.

The moratorium applies to all retail and non-retail clients of credit and financial institutions. Eligibility for the moratorium will be defined in a directive issued by the Central Bank. Applications for the moratorium are to be made by not later as of the 30th June, 2020 by contacting your financial institution. No penalties or restructuring/administrative fees shall apply to successful applicants for this moratorium.

Please direct all your queries to covid19legal@fsgm.partners

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