BUCHAREST, Romania – Romania’s central bank governor says the country cannot afford to come to the rescue of borrowers who took out loans in foreign currencies and are now pinched by higher costs.
Some 75,000 Romanians took out Swiss loans in the mid-2000s to take advantage of the country’s low interest rates. A recent surge in the franc, however, has caused the cost of those loans to soar, making many borrowers default.
The borrowers demand laws to protect them.
National Bank governor Mugur Isarescu said Friday such a measure could cost Romania up to 4.5 billion lei (1 billion euros), or 0.6 per cent of GDP. “It could have a dramatic impact on the economy.”
The International Monetary Fund has said it is opposed to marking the loans back to old exchange rate values.