Gov't moves amendments to protect debtors from sky-high franc

The Croatian government on Tuesday sent draft amendments to the Consumer Credit Act to parliament for consideration under fast-track procedure, envisaging the fixing of the Swiss franc at 6.39 kuna for 12 months whereby the difference from the franc-kuna rate on the free market will be covered by commercial banks.

The draft amendments are aimed at alleviating the status of troubled Croatian borrowers whose loans are pegged to the Swiss currency, and were forwarded to the parliament after the government's conference call, according to the government's press release.

Thus, the government responded to the latest developments since last week the Swiss national bank scrapped a cap from the franc/euro exchange rate, sending the franc (CHF) skyrocketing.

This also has affected Croatian holders of the loans denominated in the franc, given that their monthly loan installments jumped after the franc appreciated against the kuna by 18% to 7.54 kuna for one franc.

The government elaborates that the short-term measure of freezing the franc-kuna exchange rate for a year was proposed in order to protect loan borrowers from market volatility and from ending up in a situation where they would no longer be able to service their loans.

"The further activities will be aimed at seeking a long-term solution for the debtors whose loans are tied to the CHF through the conversion of the loans into the kuna or the euro-pegged loans," the press release reads, adding that the government expects the Croatian National Bank and other lenders to be actively engaged in those efforts.

The executive authorities in Croatia have the responsibility to protect the rights of citizens in compliance with the Constitution, the government said in the press release.

Earlier on Tuesday, Prime Minister Zoran Milanovic held a meeting with the Franak association that represents citizens with Swiss franc-denominated loans. According to Franak, there are around 60,000 loans tied to the franc and the latest jump could impact around 200,000 to 300,000 citizens.

(Hina) ms

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