Banks asked: Relax repayments on debt

The House of Representatives has prodded banks and the Commonwealth Development Authority to ease repayment of loans owed to them by various businesses on the island in a step to assist companies facing financial difficulties during the worsening economic crisis.

In two resolutions adopted on Tuesday, House members expressed worry over failure by some business owners to meet their obligations, such as loans and credits, due to the current slowdown in economic activities.

They asked banks and other financial institutions to help them cope with their problem, saying refinancing loans would give them the flexibility to pay back at lower rates and on longer terms.

The resolution, sponsored by Rep. Manuel A. Tenorio, came amid fears of rising bankruptcy cases stemming from the worst crisis to hit the Northern Marianas in years.

It said that “concerted efforts such as this is needed at times of despair when all hands are essential to remedy the already debilitated economic status” of the CNMI.

In another move, the House also urged CDA to refinance loan agreements under more favorable terms to allow their debtors a more eased venue of meeting their monthly obligation.

This temporary measure will help borrowers during their financial straits while they find ways to recoup lost investments, according to the resolution sponsored by Rep. Alejo M. Mendiola.

CDA, the chief government lending agency, has been granting loans to locally-owned businesses as seed money to start their ventures in a bid to allow the indigenous population to participate in the economic development of the island.

Heavily dependent on the tourism industry, the commonwealth has been battered by sharp decline in the number of visitor arrivals in the past one and half year due to the prolonged economic recession in Asia, its main source of tourists.

While the garment sector has provided relief, industry leaders have raised worries that mounting pressure, including the $1 billion filed last January lawsuit against apparel manufacturers, would affect the growth of the sector.

Nearly 2,000 tourist-related businesses have been forced to close in recent months in view of the downturn in the tourism activity, and economic analysts say the crisis is likely to last until 2002.