REACTION TO ARTICLE PUBLISHED IN DAILY NEWSPAPER POBJEDA ON 25 MARCH 2020, PAGE 11 AND HOMEPAGE, TITLED “MORATORIUM WILL COST CITIZENS MORE THAN ONE INSTALMENT”
Under the provisions of Article 26 of the Law on Media (OGRM 51/02, 62/02) and the Code of Ethics of Montenegrin Journalists, we provide a response to be transmitted entirely on the same pages and positions where the article was published:
“In these difficult days, we believe that more than ever everyone should do their jobs and responsibilities, and as much as possible avoid initiatives such as “I don’t know much about this, but I know that it is entirely wrong.”
We do not know what is more unprofessional, a journalist’s incorrect instalment calculation on the CBCG provided example, or using an utterly wrong calculation to generalise the moratorium on all loans with different maturity and interest rates, accompanied with the irresponsible publication of a stilty yet incorrect title.
Specifically, a modestly increased instalment applies to the remaining maturity, not to the total repayment term as the journalist has calculated.
In the example the journalist analysed, by acting conservatively, the CBCG deliberately took examples implying the moratorium application to the first half of the loan repayment period. In addition to the fact that the monthly annuity instalment difference is 1.09 euros, the total amount that the borrower would pay will depend on the remaining loan repayment period. Thus, the shorter the time is, the lesser the borrower will pay. In the same example, this means that in case of the remaining repayment periods of 6 or 12 months, the borrower would pay the difference of 6.56 and 13.09 euros, respectively.
Moreover, pay attention to the time dimension of money, i.e. it is not the same whether you pay something now or within 6 years. Time value of money adds up to the difference in the value of money currently available versus the money value to be available at some future point.
The CBCG measures are the maximum that a supervisor lacking an issuing function can provide, and the most comprehensive ones compared to all countries in the region. Only the CBCG and the National Bank of Serbia have granted all loan beneficiaries the right to a moratorium. At the same time, commercial banks of all other countries in the region decide whether to approve the moratorium, under the terms and conditions they specify. In other countries, everyone has welcomed the introduction of measures that were far less comprehensive than those offered by the CBCG, without questioning the calculation methods and without a negative campaign.
Each country calculates moratorium likewise. In close communication with banks, the CBCG addressed the borrowers to the maximum possible extent not jeopardizing the financial stability maintenance and banks’ sustainable operations.
To remind, the price of the borrowed money will not increase, only the contracted regular interest will be calculated but not paid for 3 months, which directly worsens the bank’s liquidity position. Bearing in mind the aforesaid, it is indeed malevolent to mention the banks’ extra profit. We note that banks have accepted that a unilateral extension of the use of borrowed money for three months can only be charged up to the amount of the regular price of that money, even though, to remind, they will not be able to use this argument when their obligations become due. Let us make it clear - banks will not be able to tell depositors that they cannot repay a deposit for another three months because the loan has not yet been repaid. We remind that banks operate with borrowed money, and there is no moratorium on that side.
Therefore, we reiterate that it is irresponsible and dangerous for anyone to offensively misinform and rebel the public with incorrect allegations, especially in days when the audience is highly sensitive due to the difficult fight against the new coronavirus and its consequences.
To conclude, we remind that banks will provide repayment schedules to all loan beneficiaries before the moratorium expires and the loan repayment obligation resumes, which is the only accurate source of information on the amount of outstanding loan obligations."