- National Treasury's loan guarantee scheme sought to assist businesses as lockdown conditions ease.
- The statement said by the first week of August, banks had provided voluntary relief on loans with a book value at risk of R537 billion.
- The statement said since the beginning of August, the scheme lent out R14 billion out of an initial R100 billion, benefiting almost 10 000 businesses.
Minister of Finance Tito Mboweni has said with the help of banks, National Treasury's loan guarantee scheme was positioned to assist businesses and spur economic recovery as lockdown conditions imposed on the country’s economy continued to ease.
National Treasury said on Thursday it had met with the Reserve Bank and the Banking Association of South Africa to discuss the R200 billion loan guarantee scheme.
Also present at the meeting were South African Reserve Bank Governor Lesetja Kganyago, deputy SARB governor Kuben Naidoo, deputy minister of finance David Masondo and representatives of various registered banks.
The statement also comes as the loan guarantee scheme has come under fire for not being accessible enough for many distressed businesses.
The statement said by the first week of August, banks had provided voluntary relief on loans with a book value at risk of R537 billion.
Mboweni said National Treasury, the South African Reserve Bank and banking firms would have ongoing discussions to figure out how the loan guarantee scheme mechanism could be improved.
"The banking industry's ongoing openness to discuss design improvements is particularly appreciated, and I note that many countries have adjusted the design of their respective schemes from time to time to respond to changing circumstances," said Mboweni.
- READ | Mboweni slams IMF loan speculation as 'urban legend'
The statement said since the beginning of August, the scheme lent out R14 billion out of an initial R100 billion, benefiting almost 10 000 businesses. The statement said another 15 000 applications were still being processed by banks.
"Firms are reluctant to take on additional debt. However, the recently announced move to Level 2 would support the re-opening of significant parts of the economy.
"With firms adjusting to the next stage of the Covid-19 Pandemic, it is hoped that the economic recovery will strengthen and the demand for credit will improve," the statement said.
The statement said demand for credit was low, due to voluntary assistance provided by the banks when the state of national disaster was first declared but that Treasury introduced changes to the design of the scheme, including a Business Restart Loan and changes to credit assessment criteria.