Deputy PM says government’s solution to CHF loans better than Montenegro’s

Deputy Prime Minister Branko Grcic said on Wednesday that the government-sponsored bill under which the status of holders of loans pegged to the Swiss franc would be made equal to that of holders of euro-indexed loans would be discussed by the government on Thursday and by the parliament next week, adding that the government’s solution was better than the one applied by Montenegro.
Grcic believes that the proposed solution is the best possible one because loans pegged to the Swiss currency would be made entirely equal to euro-indexed loans.
“It is important that the difference possibly overpaid in the previous period would be recognised in the sense that loan installments to be paid as of the moment of loan conversion would be reduced until such time when that difference has been accounted for,,” Grcic said in an interview on Croatian Radio.
He said that loan installments could actually be up to 50% lower than before, as speculated by the media, and that there were 52,000-53,000 citizens with loans pegged to the Swiss franc.
As of October 1, the banks are expected to make calculations for their clients holding CHF-indexed loans and send those calculations within 45 days to their debtors who will then see what happens with their loans, said Grcic, who is also Regional Development and EU Funds Minister.
The loan principal of holders of CHF-indexed loans will be written off in one go so that on 1 October their status could be the same as that of holders of euro-pegged loans. Also, the cost of loan conversion will be covered by the banks, Grcic said, noting that the opposition apparently sympathised with banks given that it was advocating the solution for CHF loans as applied by Montenegro, where the cost of conversion was divided among banks, debtors and the state.
Even though the loan conversion could cost 5.5-6.5 billion kuna, and according to some bank sources, as much as 8 billion, Grcic does not expect banks to sue the state.
“The Justice Ministry has thoroughly analysed all scenarios and given its opinion on whether potential lawsuits by banks could be efficient,” Grcic said, adding that the state did not want to make the banks’ status uncertain because “we need banks.”
He said that banks would incur certain losses in the next year or two and that those losses would be recognised and they would have to pay much less profit taxes.
Grcic also said that the cost of a law under which poor households would be helped with HRK 200 per month for electricity bills would not be covered by from the state budget, namely taxpayers, saying that a model of compensation had been agreed with power suppliers such as HEP.
If the SDP-led ruling coalition wins another term in office in the next parliamentary elections, as of next year it will help other vulnerable social groups as well, such as pensioners with low pension allowances, he said.
He said that in the first eight months of this year a primary surplus had been registered in the budget, for the first time since 2006.
“Our revenues in that period were three billion kuna higher than planned, with VAT revenues alone amounting to HRK 2.1 billion, but revenues from profit tax and excise taxes are rising as well. We are very solvent at the moment,” Grcic said, announcing a budget revision by the end of this month.
He added that because of that, the budget deficit would be lower than planned, around 15-16 billion kuna.
“We will end our term in office with a deficit 10 billion kuna lower than was the case with the previous government,” Grcic said.