A lifeline has been thrown to homeowners and businesses affected by the economic impacts of Covid-19 by the Government, retail banks and the Reserve Bank.
It came after Director-General of Health Dr Ashley Bloomfield announced 40 new cases of the coronavirus in New Zealand earlier today. There are now 155 cases in total.
Mortgage holders and SME customers with affected incomes would be provided with a financial support package which would include a six-month principal and interest payment holiday.
To help protect jobs and support the economy the Government and the banks would also implement a $6.25 billion Business Finance Guarantee Scheme for small and medium-sized businesses.
The major financial support package was announced by Minister of Finance Grant Robertson who said the scheme would help cushion the impact of the coronavirus.
"We will get through this if we all continue to work together," he said this afternoon.
"These actions between the Government, banks and the Reserve Bank show how we are all uniting against Covid-19.
"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."
Specific details of the initiative were being finalised and agreed upon urgently - banks would make these public in the coming days, Robertson said.
Meanwhile, the Reserve Bank agreed to help banks put the package in place with appropriate capital rules.
In addition, it would also reduce banks "core funding ratios" from 75 per cent to 50 per cent, making it easier for banks to make credit available.
The scheme leveraged the Crown's financial strength as it allowed banks to lend to ease the financial stress on solvent firms affected by the virus outbreak.
It would include a limit of $500,000 per loan and would apply to firms with a turnover of between $250,000 and $80 million per annum.
The loans would be for a maximum of three years and were expected to be provided by the banks at a competitive, transparent rate.
The Government would carry 80 per cent of the credit risk, with the remaining 20 per cent to be carried by the banks.
Banks remained well capitalised and liquid, Reserve Bank Governor Adrian Orr said.
They also remain highly connected to New Zealand's business sector and almost every household in New Zealand.
"Their ability to extend credit to firms to bridge the difficult times created by Covid-19 is critical and made more possible with today's announcements," he said.
"We will monitor banks' behaviour over [the] coming months to assess the effectiveness of the risk-sharing scheme."
The Government, Reserve Bank and the Treasury continued to work on further tailor-made support for larger, more complex businesses, Robertson said.