UPDATE: IMF says Romania gets next tranche only if consumer lending ordinance not applied retroactively

The emergency ordinance 50/2010 on consumer lending contracts should only be applied to new contracts and not to existing ones, said Jeffrey Franks, the head of the International Monetary Fund (IMF) delegation in Romania. Moreover, this will be a condition for Romania receiving the next IMF loan tranche, according to Franks. “The way the European directive was transposed into the Romanian legislation will trigger difficulties and costs. Under the EU law, it should only be applied to new contracts and not retroactively,” said Franks. He thinks applying this emergency ordinance to existing loans will create significant economic risks and it should not involve costs for banks, while still protecting consumers. The Government Emergency Ordinance 50/2010 entails a more transparent bank interest calculation, linking the final interest to ROBOR or EURIBOR interbank rates, canceling the risk fee and, in case of loans with variable interest, canceling the reimbursement fee altogether. Consumers had expected a lowering of the interest rate – and consequently of their monthly installment, hoping banks would replace their internal interest rate with ROBOR/EURIBOR, while keeping the fixed margin at the same level. Banks have however kept the same interest level and changed the way it was calculated, which triggered the consumers' discontent. Groups of unhappy customers have already started lawsuits against banks like BCR and Volksbank on this issue, while banks lobbied for the ordinance to be changed. editor@romania-insider.com