Loan restructuring scheme to be enforced come July, Romanian Gov’t says

Loan restructuring scheme to be enforced come July, Romanian Gov’t says

 

By Daniel Stroe – Bucharest

The so-called “electorate”, a fiscal scheme designed to halve bank repayment rates for low income Romanians, will go into force as of July, the Romanian PM Victor Ponta said today, reopening a chapter which has been a bone of contest between him and President Traian Basescu.

“The measure is for this year, as of  July 1. As of  July 1 we will halve the rate for two years and the bank loan will go into force again in 2016”, Ponta said explaining the confusing statements from his newly installed minister of Finance, Ioana Petrescu. The latter said that the scheme will only be enforced as of 2016.

Ponta said that in reality Petrescu referred to 2016 as the year when the measures ends and the bank loans goes into force again. “This is what the minister was trying to say, but she cannot explain complicated things in simple words…I am the translator”, Ponta joked.

In February, PM Ponta announced, during talks with the visiting IMF delegation, that his government intends to implement a consumption stimulating program which also includes tax cuts for people with restructured bank loans. The repayment scheme would envisage about 1 million Romanians and would reduce installments to up to 4 billion lei (less than 1 billion Euros) in 2014 alone.

But President Traian Basescu warned he would not sign the letter of intent with IMF if this measure, along the 7 Euro-cents fuel excise Ponta seeks to introduce as of April 1, will be mentioned in the document. An “electorate”, as Basescu put it, hinting the measure is only designed t raise Ponta votes since this is an electoral year, with Euro-elections in May and presidential polls in November. “The electorate is a fraud, a deception” Basescu said, accusing the National Bank of siding with the government for electoral purposes.

In return, the National Bank said the “electorate” was conceived by the Romanian Government and the bank only gave the governmental experts statistics and evaluations. “The scheme project meant to stimulate consumption through fiscal measures (by facilitating over the next two years a restructuring of bank loans contracts for the population with below the average salary incomes) didn’t involve and will not involve, from the National Bank of Romania, any monetary or banking policy based decisions” the bank reacted.

The Romanian Government said the measure is optional for banks and added no agreement has been yet concluded with them. Some conditions are in place to become eligible for this program, it further said, such as payment delays less than 90 days while the cuts should not exceed 500 lei (about 110 euros).