Fiscal Council: Electoral rate’s budget impact could be far below expectations


The Fiscal Council considers that the budget impact of the fiscal scheme for the restructuring of loans, also known as the Electoral Rate, could be far below the Finance Ministry’s estimates of RON 725.5 M in 2016 and RON 757 M in 2017, since the measure is not attractive for most debtors, Mediafax informs. The Council deems that it is difficult to estimate how many people will really benefit from this measure, the decision being dependent on the debtor’s capacity to pay the debt owed to the bank, but also on the banks’ willingness to approve the loan restructuring.
Thus, the Council has calculated that the annual budget impact for 2016 and 2017 could be a maximum of RON 771.73 M, a level that is close to the Finance Ministry’s estimate, if all eligible debtors opt to have their loan repayment installment lowered by 35 percent for a period of two years and if the banks approve all restructuring requests, an unlikely scenario.
Consequently, the Council believes that there is a “high probability that the net budget impact will stand at the lower part of the interval, meaning closer to zero, this being the scenario in which no eligible debtor opts for this measure or no bank approves the restructuring requests.” The Fiscal Council considers that in these conditions the annual loss of revenue should be “easily accommodated” within the draft budget so as not to affect the annual and medium-term targets. The Fiscal Council has conducted an analysis on the sample of physical persons with monthly income below RON 2,200 that owe debts to the banks, the exposure on these credits being of RON 31.81 bn, with a share of 36.93 percent in the total loans for physical persons. Approximately 985,000 debtors fall within this category, representing 48.84 percent of the total of those who contracted real-estate loans and consumer loans on the retail segment.  Magda Sandulescu, executive director of the BCR retail network, considers that the Electoral Rate was introduced too late and will have a reduced effect, stating that a better option would have been for the state to fiscally deduct the interest or the total cost applied to the monthly loan for certain categories of clients. “The scheme’s real impact will not be great, since the clients have understood that postponing an interest rate and hiking the credit period comes with added cost, so the efficiency of the instrument is understood from the effort of education. We were the adepts of simplified measures that would have lead to rapid effect in the market,” Sandulescu stated on Saturday at the BCR Conferences.