Romania To Change Ordinance On Consumer Credit Contracts

"We will review the recent ordinance (Ordinance 50/2010) to ensure transparency in interest rates for consumer credit contracts to ensure full compliance with EU law, particularly as regards non-retroactivity," says the additional letter of intent to the stand-by agreement signed by Romania with the International Monetary Fund, obtained by MEDIAFAX.

For overly indebted households, the efforts implemented by banks for a decentralized loan rescheduling and restructuring have been broadly adequate to address debt service pressures, the government says.

"We remain committed to supporting financial stability by refraining from promoting legislative initiatives, such as the current draft to the personal insolvency law that would undermine credit discipline. We will seek to maintain the current framework that allows banks to rely on their in-house expertise for the collection of their claims," the letter reads.

Moreover, the government engages to sustain the banks in their loan restructuring process, saying it will closely monitor the results of these operations.

Official sources told MEDIAFAX on Tuesday that the banks insisted to introduce in the letter of intent a provision forcing the government to change the ordinance on the consumer credit contracts within the limits of the EU norms and to give up the idea of remaking the developing contracts.

According to the current legislation, the banks should change by September 19 almost all the consumer loan contracts, in order to adapt them to the new regulations.

Romania and the IMF last year signed a EUR13 billion loan agreement, part of a larger EUR20 billion aid package that includes funds from the EU and other international lenders.

Joint teams from IMF and the EU arrived in Bucharest July 26 for the fifth review of Romania's agreement.

Following the mission, the IMF will decide whether to disburse another EUR914 million to Romania.

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