International Finances and Personal Insolvency
Swiss franc soaring triggers debates in Romania about a personal insolvency act.
România Internațional, 27.01.2015, 13:41
A joint mission of the International Monetary Fund, the European Commission and the World Bank has come to Romania for their third assessment of the 4-billion euro precautionary loan agreement, signed with Bucharest in 2013. Until February 10th the international experts will discuss with representatives of the Government, the Central Bank, business people and trade unions about the recent economic developments and the reform priorities.
According to economic analysts, issues like a revised calendar for the listing of state-owned companies, the stage of the privatization process and a fiscal code that should stay unchanged for the following five years are also to be discussed.
High on the meeting’s agenda is the impact of the soaring Swiss franc on the financial sector and the Romanian National Bank’s policy, as well as the recent decision of the European Central Bank to initiate an extensive quantitative easing scheme. The international lenders’ visit to Bucharest takes place against the background of efforts by the Romanian Government, Parliament, National Bank, commercial banks and people with Swiss franc loans to find solutions to the crisis generated by the Swiss currency’s historic appreciation against the Romanian leu. The over 75 thousand Romanians who have contracted loans in this currency, have found out their rates are now about 20% higher.
Before coming to Bucharest, the IMF, European Commission and World Bank experts have voiced concern, in a letter sent to the Romanian authorities and the National Bank of Romania, at the possible conversion of hard currency loans into national currency loans, against the currency exchange rate at the time when the loans were contracted. This measure might affect the financial system’s stability, the international lenders have warned. They have also pointed out that the personal insolvency law, discussed these days in Parliament, needs to be preceded by impact studies, consultations with all parties involved and the assistance of other EU states where similar laws are in force.
Romanian lawmakers want this bill adopted as soon as possible, for fear that people’s defaulting on their loans might turn into a social problem. Economic analysts however, say this is not the first time when IMF representatives are coming to support the banks and postpone the adoption of this bill. The first draft law on personal insolvency was tabled in 2010.
