Moratorium Law: Panamanian banks facing the post-covid economic recovery

• Published date: 13 March 2023
• Author: Patricia Cordero
• Law Firm: Blogs Alemán, Cordero, Galindo & Lee

Author: Patricia Cordero

Moratorium

Law:

Panamanian

banks facing

the post-covid

economic

recovery

The pandemic aected us all. After almost two years of

the pandemic the economic environment has been

complicated for sectors of the economy which main

income was directly impacted by the mobility and

capacity restrictions implemented to deal with the

Covid-19 contagions.

However, at present, after a staggered opening and with

the benefits of a high vaccination rate (80% of the target

population) that has helped to sustain acceptable levels

of cases, the economy is beginning to show signs of a

slow but sustained recovery.

We may have weathered the most dramatic moments of

this storm; however, many sectors such as the

Panamanian banking sector now face the challenge of

recovering a portion of their portfolios, those

corresponding to clients who qualified for the economic

benefits granted by Law 156 of 2020.

In view of the ongoing pandemic and its eect in the

economy, in 2020 the State enacted a Moratorium and

Economic Measures Law that gave bank customers the

opportunity to renegotiate or restructure their bank

debt.

Article 2 of the Law stipulated that the moratorium

covered to loans granted by banks, cooperatives and

finance companies: residential mortgage loans, personal

loans, auto loans, credit cards, small and medium

enterprise loans, commercial loans, transportation sector

loans, agricultural sector loans and consumer loans.

Those who qualified for the benefits of the moratorium,

as stipulated in Article 2 of Law 156 of 2020, were

encouraged to contact their banking entities to explain

the particularities of their economic situation and how it

impacted their financial obligations with the banks.

Through this dialogue, the banks and their clients agreed

on the best way to restructure their debts.

At the time banks agreed to new terms with their clients

to restructure their corresponding debts. Some

renegotiations or restructuring plans included granting

grace periods - stipulated in the moratorium - which

varied between 6 and 18 months, depending on the

client's situation, during which no interest was charged.

With the Moratorium Law, banks restructure their

portfolios providing opportunities to their clients,

in the midst of an economy that is beginning to

recover.