The first deputy governor of the Romanian central bank,
The central bank official also agrees in principle with the idea of engaging the only state-owned bank CEC in a broad re-financing programme, involving among others funds borrowed by the government from IFIs and public guarantees for households. It might not be totally irrelevant that Georgescu was once a top member of the current ruling party - leftist PSD.
Such ideas would address the demand gap issue, Georgescu explains. Furthermore, given the shift in consumer preference toward lower-quality goods the supplementary demand would not result in more imports but rather in the demand for domestic goods, he said.
Georgescu also encouraged in principle the idea of involving CEC in re-financing the population. The government would guarantee the loans refinancing programme for households, managed by CEC and funded from credit lines negotiated by the state with IBRD, EBRD and/or EIB, under such an arrangement.
The government's proposal of helping low-income bank debtors is going to be discussed with the IMF and the EU in July, Georgescu also confirmed. As we reported, the scheme involves tax allowances in the future [2016-2017] for recipients whose loans are restructured by banks such as their payments over 2014-2015 are half the current level. The scheme would be voluntarily agreed by both the debtor and the bank.
The idea was broadly discussed in recent weeks, given its unclear impact and the use of public funds. The debate has visibly a political dimension, with President Traian Basescu accusing the senior ruling PSD of petty politics. Disagreements about this proposal contributed to the tensions between the two major ruling parties - PSD and PNL.
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