"They were not cautious and alert enough when offering cheap loans six, seven or eight years ago and will have to cover the cost in this case," Milanovic said.
Last Friday the Croatian parliament adopted government-sponsored amendments to the Consumer Credit Act fixing the Swiss franc exchange rate to 6.39 kuna for one year in order to help citizens with franc-denominated loans after the franc exchange rate suddenly soared ten days ago. The amended law enters into force on Tuesday.
Asked what the government was planning to do this time next year, Milanovic said he was sure that regardless of which government was in power at that time it would take account of the specific conditions in which Croatian borrowers had found themselves, citing a sharp decrease in real estate prices and a rise in the Swiss franc exchange rate. "The government needed to react because this surpassed the competence of the Croatian National Bank," he added.
Milanovic said that banks would eventually have to take responsibility for debt repayments, adding that fortunately the Croatian banking system was always quite reliable and was never exposed to risky borrowing and there had been no sign of a banking crisis in Croatia.
Milanovic said that another possibility was under consideration to introduce a special exit clause that would be applied retroactively, which would give debtors a choice of continuing to live in their mortgaged property as tenants and not as owners.
(Hina) vm