Govt announces measures to ease debt burden on citizens

…mortgage interest relief ceiling raised to $30M

Ahead of the emergency budget being presented on Wednesday, President Dr Irfaan Ali has announced that several initiatives meant to make homeownership easier particularly for young people and to ease the debt burden, will be put into effect.
This includes mortgage interest relief, which is a tax refund from the Guyana Revenue Authority (GRA) that reduces the amount of interest paid by a homeowner on their mortgage. The initiative was introduced in Guyana back in 2013.
When it was first introduced, a person had to be a first-time homeowner and the loan could not have exceeded $15 million in order to qualify for the relief measure. According to Ali, this sum will be increased to $30 million.
“To stimulate the economy, to ensure more young people have access to loans, so that young people and professionals can benefit from incentives, we have decided in terms of mortgage interest relief, to increase the sum at which you will have tax relief, to $30 million.”
“So, the mortgage interest relief, interest incurred on housing, loans, up to $30 million, will now be tax-deductible from their income tax. So, this will help new homeowners and young people, where your loans for housing, the interest will become income tax-deductible. This will bring tremendous reduction in the cost for homeownership and will put back more money in people’s pockets.”
President Ali also announced that in a bid to get commercial banks to reduce their low-income loan interest rates, the Government will be granting corporate tax relief for the banks. This will ensure persons can borrow up to $10 million at lower interests.
“Increase in the low-income loan to qualify for corporate tax relief in the banking sector to $10 million. Right now, the limit is $8 million for the banks to qualify for corporate tax relief. So, the special interest rate for low-income loans, that applied to loans up to $8 million, will now apply to loans up to $10 million,” Ali said.
Last month, President Ali had announced that his Government has reached agreements with the local banking sector to extend the moratorium on loan payments until this yearend, and to cut interest rates.
This means that customers with mortgages and other loans will be spared the financial burden of servicing these loans during the pandemic. In addition, their loans will not be classified as non-performing, ensuring that they do not default.
“Commercial banks agreed to offer general concessional reductions of interest rates of one per cent and up to two per cent on customer loans below $10 million until December 30, 2020. The existing lending rate ranges between 6.5 per cent and 16 per cent. Some commercial banks have agreed to apply special treatment to the interest accrued during the moratorium period,” he had explained.
“Commercial banks have agreed to waive all bank charges, including ATM and Merchant Bank charges to encourage more out-of-bank transactions, as well as charges for transactions by senior citizens,” he said, adding that these measures will not impact the soundness of the banking sector.
Ali had also announced that the Bank of Guyana would relax certain requirements that would allow banks to cushion their losses and increase liquidity by $9.4 billion. These requirements are set out in the 13 guidelines that the Bank uses to regulate financial institutions. (G3)