Directive 18 ‘on moratoria in exceptional circumstances’ – reactivation of moratoria

In view of the protracted impact of the COVID-19 pandemic, the Minister for Health, in consultation with the Ministry for Finance today issued Legal Notice (LN) 15 of 2021 on ‘Moratorium on Credit Facilities in Exceptional Circumstances’, which relates to the reactivation of moratoria in Malta. This reactivation allows borrowers to submit their applications for new moratoria or to extend their existing moratoria subject to a number of conditions, before 31 March 2021.

Following the publication of LN 278 of 2020, published on 30 June 2020, the moratorium application deadline was extended to 30 September 2020. During this extended window, borrowers were able to apply for a new moratorium, or else extend by an additional six months their existing moratoria.

In light of the differing economic conditions to those prevalent when CBM Directive 18 was originally issued, the application period is being reactivated with targeted conditions according to which an applicant can benefit either from (i) an extension to an existing moratorium, or else (ii) a completely new moratorium.

Applicants who are applying for a moratorium on a loan which was never subject to a moratorium, are entitled to a moratorium of up to nine months. On the other hand, borrowers who have benefitted, or are benefitting, from a moratorium shorter than nine months can apply for an extension so that the duration of their existing moratorium would be extended to cover a moratoria period of no more than nine months in total. Loans already benefitting from a moratorium period of more than nine months will not be eligible for a further extension.

Certain conditions apply and these are explained in the ‘Guide on the amendments to Central Bank of Malta Directive 18: On Moratoria on Credit Facilities in Exceptional Circumstances’ document published by the CBM to accompany the amended Directive 18.