IMF: Capping interest rates would adversely affect financial stability

The International Monetary Fund (IMF) has recommended Romania to avoid legislative initiatives aimed at capping interest rates for household lending and the prices at which individuals re-purchase debts acquired by third parties, according to a concluding statement released on Friday at the end of consultations with Romania under Article IV.

"Legislative initiatives that harm the financial system should be avoided. Several recent initiatives would, if enacted, reduce the amount of credit provided to the real economy and slow the resolution of NPLs, thereby adversely affecting financial stability. These include the proposals for capping interest rates for household lending and the prices at which individuals re-purchase debts acquired by third parties," the IMF said.

At the end of February, the Senate passed a legislative proposal to amend Government Ordinance 13/2011 regarding the legal payable and penalising interest on financial dues, providing for the interest on mortgage loans not to exceed 2.5 times the reference interest rate of the National Bank of Romania (BNR). Senator Daniel Zamfir of the National Liberal Party (PNL), the sponsor of the project, supports the amendments in the report of the budget and economic committees, mentioning that interest rates on deposits are at the lowest level, while the credits taken out by Romanians have the highest costs.

The Senate is the first chamber considering the legislative initiative, while the Chamber of Deputies is the decision-making chamber.

The Senate also adopted a legislative proposal amending OUG 50/2010 on credit agreements for consumers, which stipulates that the transferee will not be able to claim from the indebted consumer more than double the amount paid by the former to buy the debt from the assignor. PNL Senator Daniel Zamfir, the bill sponsor, specified that this legislative initiative introduces "the right of the person who has been subjected to forced enforcement to be able to redeem the dispossessed asset by paying to the recovery company double the amount the transferee paid to buy that asset from the bank." AGERPRES (RO - author: Constantin Balaban, editor: Andreea Marinescu; EN - author: Corneliu-Aurelian Colceriu, editor: Adina Panaitescu)