12 March 2020
On June 26, 2019, the President of the Republic of Kazakhstan signed the Decree “On measures to reduce the debt burden of citizens of the Republic of Kazakhstan”. As part of the implementation of this Decree, the Problem Loans Fund was determined by the financial operator.
These measures provided for the cancellation of only penalties and fines for unsecured consumer loans to the citizens of the country. And the cancellation of the principal debt and remuneration with a limit of up to 300 thousand tenge was provided only for certain categories of citizens: large families; families receiving survivor benefits; families with disabled children, disabled from childhood over 18 years old; recipients of state targeted social assistance; orphans; children left without parental care.
In world practice, the governments of the countries of the world pay special attention to the level of overdue debt on consumer and mortgage loans, including citizens with low income.
The significant increase in the level of such loans has historically coincided with many serious economic crises and was the cause of the US and subsequent European economic crises of 2007-2012.
In this regard, many countries take measures at the government level when the debt burden of the population increases. Such measures can be taken preventively in the form of legal and supervisory reforms, as well as in the form of restructuring and writing off the debt of citizens.
For example, in Korea, the credit amnesty for citizens was carried out twice - in 2013 and 2017. The operator of the program was the Korea Asset Management Corporation, an analogue of the Problem Loan Fund in Korea. The 2013 program provided for both restructuring and writing off part of the debt (from 30% to 70%) on consumer loans of citizens. And in 2017, the government wrote off bad loans to 1.6 million low-yield citizens of the country.
In Iceland, after the 2007 crisis, comprehensive measures were taken to reduce the debt burden of citizens. Thus, a separate law was adopted, which provided for the restructuring of loans, as well as debt cancellation and the provision of financial support to the population.
In the post-Soviet space, Azerbaijan can be cited as an example, where last year the President signed a decree on the repayment of credit debts of citizens in order to compensate for financial losses as a result of the devaluation of the national currency.
Over the years, debt relief on consumer and mortgage loans was also written off by the governments of Belgium, Georgia, Thailand, Mexico, Brazil and India, and debt restructuring on consumer and mortgage loans was carried out by the United States (in 2008), Ireland (in 1992), France ( 1995-1998), Great Britain (2008), as well as many other countries.
At the same time, within the framework of the Decree, the Head of State instructed the National Bank to take a set of regulatory measures to restrict the issuance of consumer loans by banks, including a ban on the provision of loans to citizens with incomes below the subsistence level, which will not aggravate their social situation.