The Panamanian Government enacted Law number 156 on June 30 2020 (hereinafter identified as “the Law”), as a relief measure for people economically affected by the Covid-19 pandemic. The Law, published in the National Gazette on July 1 2020, and effective retroactively as of March 1 2020, established a moratorium period until December 31 2020, for certain credits granted by banks, financing companies (“empresas financieras”) and cooperatives (public or privates).
The benefits established by the moratorium apply solely to persons affected by the economic crisis caused by the Covid-19 pandemic. The Law recognizes as “affected persons” those whose employment contract has been suspended or terminated, independent workers and merchants whose activity has been affected by the health measures established by the Executive Branch.
The credit agreements included in the moratorium are:
· Residential mortgage loans.
· Personal loans.
· Car loans.
· Credit cards.
· Loans to small and medium-sized companies.
· Commercial loans.
· Loans to the transportation sector.
· Loans to the agricultural sector.
· Consumer loans.
To apply to the moratorium, the interested parties must prove their economic affectation, either by way of a sworn statement before a Public Notary or by providing any evidence confirming the reduction of income for independent workers and merchants or the decrease in their working hours, the suspension or termination of their employment contracts, encompassing public and private sector employees.
During this moratorium period, the banks, financing companies (“empresas financieras”) and cooperatives (public or privates), will not be able to increase applied interest rates or collect surcharges or any other interest concerning the credit agreements included in the moratorium.
During the declaration of the national state of emergency and up to 60 days after its end, the credit history of the clients registered at Panamanian Credit Association will not be affected.
The Law also establishes that once the term of the moratorium expires, the creditors and debtors will negotiate by mutual agreement a refinancing or prorating of the debt, without charging any fees for late payment or any other administrative expense, and without affecting the debtor’s credit references.
Please do not hesitate to contact FABREGA MOLINO’s Banking and Finance Team for any assistance you may require regarding these measures.