The fiscal deductibility of the interest rate of mortgages, theelimination of VAT for loan-related insurance and the prioritycapitalisation of the SME Loan Guarantee Fund are among bankers'proposals for the revival of lending.
The Romanian Banking Association (ARB) last year submitted toFinance minister Sebastian Vladescu a list of 17 steps that arelikely to aid thaw private lending.
Largely, this may come about in the wake of the state'sinvolvement through guarantees and subsidies, bankers believe.
Thus, banks maintain the Finance Ministry should view raisingthe Guarantee Fund's capital as a priority, for the institution tobe able to expand current guarantees, but also enter new projects,also through the creation of a guarantee scheme for cash-strappedcompanies.
For the time being, the Finance Ministry has prepared aregulation specifying the Fund's involvement in the strategies oflocal authorities and utilities to draw in European funds.
An older proposal by bankers envisages the fiscal deductibilityof the interest rate of mortgages, to the end of boosting demandfor such loans, but the Finance Ministry is not likely to agree ona move that would trigger fewer budgetary revenues.
Many banks have tens and hundreds of millions of euros blockedin housing projects for which buyers can no longer be found or thatcannot even be finalised. As a result, ARB proposes that the stategrant subsidies to real estate developers provided they sell newlybuilt housing units at maximum preset prices: 80,000-100,000 eurosfor Bucharest apartments and other big cities, and 60,000 euros forsmaller cities. An alternative is setting price caps per squaremetre: 900-1,000 euros/square metre in Bucharest and other bigcities, and 700-800 euros/sqm in towns.
A major concern for banks is related to the fast risingunemployment rate, as major layoffs are operated in the publicsector.
As a result, ARB representatives asked for the resumption of theprogramme managed in the past 7 years by the National EmploymentAgency, which envisaged granting loans at lower interest rates tojob creating companies.
At the same time, they are waiting for a rapid clarification onthe number of employees who are going to be made redundant in thebudgetary sector.
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