Basescu, The Banks And BNR

The State will consider taking action against those who deliberately do not pay their loans in order to determine them to do so, as overdue payments towards bank loans have surged lately, President Traian Basescu said. "It appears that very many people think that, if there is a crisis, they can afford not to pay back their loans. My very serious message is that those who do not have a good reason not to pay, should pay in due time. Thus, in order to protect the banking system, we will consider State action, so that those who do not pay on purpose should be stimulated to reconsider," Basescu said. He called a meeting with representatives of the top 12 banks in Romania, Governor Mugur Isarescu of the National Bank of Romania (BNR) and Finance Minister Gheorghe Pogea yesterday to brief them on the talks held at the European Commission at the end of last week.

The overall volume of overdue payments towards loans in RON and forex increased by 178% between January 2008 and January 2009 to 3.52 billion RON from 1.26 billion RON. Despite a significant economic slowdown in the last quarter of 2008, President Basescu appeared optimistic about economic performance this year. "Romania will achieve economic growth. Small growth, but still growth! Despite the significant economic slowdown, I remain optimistic against many estimates that Romania will go into recession. We will have economic growth between 1.5 and 2%," Basescu said.

The president sees the Romanian banking system as solid and able to continue to finance the economy. "I will stimulate the partnership among banks, the Government and the National Bank. I have become aware of several problems with the proposed legal changes pointed out by the banks and I will keep them in mind," he said.

Radu Gratian Ghetea, President of the Romanian Banking Association, said he was glad that President Basescu would consider the banks" objections to the proposed legal changes. He referred to the Consumer Protection Law, which "can cause grave damages to the banks" and the Civil Procedure Code, which would disband bank executors. In his opinion, the proposed changes to the Civil Procedure Code could lead to the termination of 500 jobs for bank executors and favour court executors.

National Bank Governor Mugur Isarescu stated his readiness to cooperate with the commercial banks and the Government as it was in the country"s best interest to make the partnership work. As Romania is contemplating a financing agreement with the international financial institutions, Governor Isarescu stressed that responsibility was the keyword in this period. The repayment of foreign financing from the European Commission or other international financial organizations should coincide with the peak of EU funding inflows to Romania, that is, 2014, Isarescu added.

"To turn to foreign financing under the current circumstances is an act of great responsibility so the National Bank"s request is that the mass media should treat these negotiations and evaluations with the same degree of responsibility," he said. The Governor stressed the importance of synchronizing the repayment of foreign financing upon the peak of the country"s cash inflows. "The 30 billion EUR from the EU is scheduled to enter Romania until 2014. We believe that the repayment of the foreign financing should follow the same schedule," he said.

Finance Minister Gheorghe Pogea also played an important part in yesterday"s meeting but, as the meeting exceeded the initial schedule, he had to leave to attend a Government meeting.