29 June 2021:my Say: Moratoriums for SMEs — an Islamic finance alternative
As repeated waves of the pandemic have led to new lockdowns and economic disruption, there have been renewed calls for moratoriums. Moratoriums, however, merely offer borrowers breathing space but do not solve anything, nor are they sustainable in the long term. The fact that the same entities offered the moratorium earlier are in need of it again says much about its efficacy as a solution.
Moratoriums are the proverbial “kicking the can down the road”. As a potential squeeze on bank profits is often mistaken as the only cost of a moratorium, such calls seem logical and even politically correct. There are, however, several problems with this.
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