Have moratoriums been conceded to bank customers?

Yes, under the terms of Decree-Law no. 22/2020, of 5 June, (“Decree-Law no. 22/2020”), bank customers who have entered into loan agreements with banks or other deposit-taking institutions until 1 March 2020, regardless of their purpose, may benefit from a 90-day moratorium on the payment of the instalments of their loans which are due within 3 months following the date of 8 June 2020 (the date on which the decree-law came into force).

The approved moratorium covers the capital and part of the interest owed by the banking costumer (the debtor only pays 40% of the agreed interest remuneration, the remaining 60% being borne by the State).

Following the 3-month period mentioned above, the maturity of the capital and interest obligations that occur between the end of this period and the end of the loan agreement is also deferred by 3 months (for the purpose of calculating the interest remuneration for the period mentioned herein, the capital obligations are considered to have been met without any deferment, and the applicable interest rate, when variable, shall be the interest rate in force at the time when the interest obligation would have fallen due if it were not for the deferment).

The provisions of Decree-Law no. 22/2020 are applicable to any other pecuniary obligations (i) ancillary to the capital and interest obligations or (ii) arising from agreements that are ancillary to the loan agreement (namely security or insurance agreements).


Who may benefit from this moratorium?

The following categories of bank customers may benefit from the moratorium:

a)    Natural persons of Timorese nationality;
b)    Non-profit legal persons with headquarters in Timor-Leste;
c)     Individual commercial businessman, duly registered; and
d)    Commercial companies incorporated and registered under Timorese law.

The moratorium does not apply to the bank customers, even if they fall into one of the categories mentioned above, who are engaged in any of the following activities:

a)    Telecommunications;
b)    Extractive industries; and
c)     Financial services, namely deposit-taking, granting of credit and payment services.


What are the eligibility requirements for this moratorium?

The moratorium established by Decree-Law no. 22/2020 applies only to bank customers who meet all of the following conditions:

a)    The credit must be classified as "standard" or "under supervision";
b)    The absence, in the two months prior to the entry into force of the decree-law, of the registration of situations of default in the Credit Registration Information System in relation to any loan agreement to which the debtor is a party;
c)     The debtor is not in default of any pecuniary obligation whose creditor is the State or another public entity, namely taxes and social security contributions.


How can I access the moratorium?

Banks or other deposit-taking institutions shall verify, at the request of bank customers, if they are included in the universe of debtors covered by Decree-Law no. 22/2020 and if they fulfil the eligibility requirements listed therein.

In the application to be submitted before the banks or other deposit-taking institutions, bank customers must declare on oath that they are not in default of any pecuniary obligation whose creditor is the State or another public entity (the lack of veracity, in whole or in part, of the declaration provided for herein causes its author to incur the criminal liability that falls to the case).


Am I protected from contractual consequences?

The moratorium regime is designed to protect bank customers from the negative effects that could otherwise occur and, therefore. the debtor is deemed to have discharged his obligation in good time and not to be in default. Thus, banks or other deposit-taking institutions cannot:

a)    Terminate the agreement with just cause;
b)    Unilaterally terminate the agreement;
c)     Invoke the acceleration of all outstanding instalments (article no. 715 of the Civil Code of Timor-Leste); and
d)    Activate any co-debtor or guarantor of the debtor in the agreement.

The regime enacted by Decree-Law no. 22/2020 is mandatory and all contractual stipulations that directly or indirectly contradict it are null and void.



This information is being updated on a regular basis.

All information contained herein  and all opinions expressed are of a general nature and are not intended to substitute recourse to expert legal advice for the resolution of real cases.