Covid-19: Government announces $6.25b financing scheme

NZ Herald,
Publish Date
Tue, 24 Mar 2020, 3:02PM

Covid-19: Government announces $6.25b financing scheme

NZ Herald,
Publish Date
Tue, 24 Mar 2020, 3:02PM

The Government has announced a six-month mortgage holiday for those whose incomes have been affected by Covid-19.

The Finance Minister Grant Robertson and Prime Minister Jacinda Ardern are giving an update on Covid-19 as the country prepares to go into lockdown at 11.59pm tomorrow.

The Government, retail banks and the Reserve Bank announced a major financial support package for home owners and businesses affected.

The package will include a six-month principal and interest payment holiday for mortgage holders and SME customers whose incomes have been affected by the economic disruption from Covid-19.

The Government and the banks will implement a $6.25 billion Business Finance Guarantee Scheme for small and medium-sized businesses, to protect jobs and support the economy through this unprecedented time.

"We are acting quickly to get these schemes in place to cushion the impact on New Zealanders and businesses from this global pandemic," said Robertson said.

"These actions between the Government, banks and the Reserve Bank show how we are all uniting against Covid-19. We will get through this if we all continue to work together.

"A six-month mortgage holiday for people whose incomes have been affected by Covid-19 will mean people won't lose their homes as a result of the economic disruption caused by this virus."

The specific details of the initiative are being finalised and agreed urgently and banks will make these public in the coming days.

The Reserve Bank has agreed to help banks put this in place with appropriate capital rules. In addition, it has decided to reduce banks 'core funding ratios' from 75 per cent to 50 percent, further helping banks to make credit available.

The Business Finance Guarantee Scheme will provide short-term credit to cushion the financial distress on solvent small and medium-sized firms affected by the Covid-19 crisis.

The scheme will include a limit of $500,000 per loan and will apply to firms with a turnover of between $250,000 and $80 million per annum. The loans will be for a maximum of three years and expected to be provided by the banks at competitive, transparent rates.

The Government will carry 80 per cent of the credit risk, with the other 20 per cent to be carried by the banks.

Prime Minister Jacinda Ardern meanwhile said it is positive news that 12 people with coronavirus have fully recovered.

"I obviously expect that number to continue to increase."

The majority of people will recover from Covid-19.

Six people are in hospital with Covid-19 but none require ICU care.

The underlying principle for alert level 4 is to reduce contact to people to the "bare minimum" so the simplest thing Kiwis can do is stay home.

"That's how we will save lives."

She said we needed to pay gratitude to those working in essential businesses, "the necessities of life", and we can show that by staying home now.

"You are literally putting those at risk who have to be there, like our hospital workers."

You will be able to leave your house for a walk, but don't congregate, the Prime Minister said.

When you do "essential errands", keep your distance from those working.

"This is life that won't be normal."

The Covid committee is working to provide more updates on what are essential services and the starting point is closing as many businesses as possible. If they find others need to be open, they will do that.

"We will be ready to be responsive... We have never shut down our country before."

If you are not providing a necessity of life, you should close, the PM said.

Ardern said there had been a range of decisions made for people on temporary and student visas.

"This event is unprecedented in New Zealand - we have never shut down our country in 48 hours before."

For anyone who is stuck around the country, they will be able to get home and arrangements can be made.

Ardern said she simply wasn't willing to wait for answers to logistical questions before shutting the country down.