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Credit policy

The state banks alone possessed the legal authority to proffer credit, the essential function of which was to ensure the fulfillment of the goals set forth in the national plan. Unlike subsidies from the state budget, credits had to be repaid--with a small interest charge--according to a fixed timetable. Initially, the banks set interest rates at levels high enough merely to cover expenses, because it was not the function of interest to reflect the market value of money. But on January 1, 1975, a graduated scale of rates went into effect, whereby planned credits ranged from 0.5 to 5 percent; special loans to enable enterprises to meet their payment schedule ranged from 4 to 7 percent; and the rate for overdue loans went as high as 12 percent. Punitive surcharges were levied for delays in bringing investment projects into operation (2 percent) or for failing to free up unused machinery and equipment within six months (6 percent). Plant-modernization loans carried an interest charge of only 1 percent but were limited to 5 million lei per project and had to be repaid within four years.

Data as of July 1989