New Zealand announces mortgage holiday, business finance support to cushion virus impact

FILE PHOTO: New Zealand's Finance Minister Grant Robertson speaks about the "wellbeing" budget in Wellington, New Zealand, May 30, 2019. REUTERS/Charlotte Greenfield

WELLINGTON (Reuters) - New Zealand said on Tuesday that retail banks will offer a six-month principal and interest payment holiday for mortgage holders and small business customers whose incomes have been affected by the economic disruption from COVID-19.

The government and the banks will also implement a NZ$6.25 billion ($3.62 billion) business finance guarantee scheme for small and medium-sized businesses, to protect jobs and support the economy through this unprecedented time, Finance Minister Grant Robertson told a news conference.

The scheme will include a limit of NZ$500,000 per loan and will apply to firms with a turnover of between NZ$250,000 and NZ$80 million per annum.

The government will carry 80% of the credit risk, with the other 20% to be carried by the banks, Robertson said.

He added that the Reserve Bank of New Zealand (RBNZ) has decided to reduce banks’ core funding ratios to 50% from 75%, further helping banks make credit available.

Reporting by Praveen Menon; Editing by Muralikumar Anantharaman