Gelin: NBR needs to cut interest rate to revive lending

The key to reviving lending is to have NBR cut the key rate for RON, because with the current levels of interest rates on the market, there is no demand for loans any longer, Patrick Gelin, chairman of BRD, told Ziarul Financiar.

“The reduction of the interest rate for RON is the key, because demand for loans, not the supply, has become the big problem. I hope that once the agreement with the IMF has been approved by the Board in Washington and premises for the stability of the exchange have been created, the NBR will be in a position to cut the rate because the current levels on the market are too high, and at 20% a year, I, too, would think twice about taking a loan as it is very expensive,” Gelin told ZF in an interview. He says no miracle can be expected after the NBR starts freeing up funds following the change in the method for calculating the minimal mandatory reserves. “Perhaps some banks will cut their margins, but to unfreeze demand for loans, NBR needs to cut the rate.” The interest cut is, Gelin believes, also one of the main factors in mitigating the effects of the crisis in Romania, along with the Government’s capability to take concrete steps to help the economy. “We are still waiting for a clear plan of action and projects. The entire Europe has specific plans to help economies, to inject funds, but this is not the case in Romania, for the time being at least.” The banker says that the crisis has not yet caused too much trouble in Bucharest, but has done so outside the capital, in medium-sized cities with captive companies reliant on the orders of big companies. He also says that speeding up investment in infrastructure, especially in roads, can be a solution to restart the engines of the economy, along with a potential cut of VAT in the construction sector, an improvement of budget revenue collection and the payment of the state’s debts to private companies.