Debt relief in the pandemic lessons from India, Peru and Uganda

The widespread use of debt moratoria in response to the COVID-19 health and economic emergencies has succeeded in stabilizing financial systems and given borrowers all over the world immediate, if temporary, relief. Financial regulators in at least 115 countries in March and April 2020 issued special permission for financial services providers (FSPs) to provide moratoria and other debt restructuring, unleashing an extraordinary effort to reprocess millions and millions of loans. In many countries, this restructuring involved major portions of their loan portfolios, and in some countries, efforts focused on loans to small enterprises and low-income borrowers. As poverty rates and food insecurity rose worldwide, the moratoria have helped millions of people, especially the more vulnerable, better manage their shrinking resources.

This Briefing examines how the debt moratoria unfolded in three countries - India, Peru and Uganda - to better understand the impact on consumers, especially low-income borrowers, and the tradeoffs regulators and FSPs made between achieving financial stability and meeting consumers’ needs.