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Romania Credit policy
The state banks alone possessed the legal authority to
proffer
credit, the essential function of which was to ensure the
fulfillment of the goals set forth in the national plan.
Unlike
subsidies from the state budget, credits had to be
repaid--with a
small interest charge--according to a fixed timetable.
Initially,
the banks set interest rates at levels high enough merely
to cover
expenses, because it was not the function of interest to
reflect
the market value of money. But on January 1, 1975, a
graduated
scale of rates went into effect, whereby planned credits
ranged
from 0.5 to 5 percent; special loans to enable enterprises
to meet
their payment schedule ranged from 4 to 7 percent; and the
rate for
overdue loans went as high as 12 percent. Punitive
surcharges were
levied for delays in bringing investment projects into
operation (2
percent) or for failing to free up unused machinery and
equipment
within six months (6 percent). Plant-modernization loans
carried an
interest charge of only 1 percent but were limited to 5
million lei
per project and had to be repaid within four years.
Data as of July 1989
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