Government Decision: Additional rules for non-repayable loans with state guarantees
The Government has approved the rules on how to deal with loans that have been taken out with state guarantees and that have not been repaid. Today's decision of the Council of Ministers determines the steps that will be followed for the recovery of these debts and for the treatment of the assets of borrowers that have not been paid. According to the Government's decision, the process will be followed by the Agency for the Management of Guarantees and Defaulted Loans. The procedures begin when the Ministry of Finance provides the state guarantee on behalf of the borrower to the bank or when it is established that there is an outstanding obligation to the state.
After this, the Agency sends the borrower a notice of debt repayment and verifies his financial situation. At this stage, income and the real possibility of paying the obligation are checked.
If it turns out that the debtor has the ability to pay, the Agency may request the freezing of bank accounts and the seizure of amounts to recover the obligation that has been paid by the state.
In cases where the debt is not repaid, the procedure is transferred to the court and then followed by enforcement until the final repayment of the obligation to the Ministry of Finance. All money that is recovered goes directly to the state treasury account.
The decision also defines how sovereign guarantees will be managed. Second-tier banks must report their status every month, while the Agency verifies each payment request before it is approved by the Ministry of Finance.
If borrowers continue to default on their obligations, the assets left as collateral, as well as other assets of the debtors, may become the property of the Agency through enforcement procedures.
These assets are then administered by the Agency and can be sold through public auction according to the rules for the sale of state property. The money collected from their sale is paid into the state budget to cover the debt.
The decision also repeals a 2009 decision that regulated the treatment of loans transferred from second-tier banks with entirely state capital to the Credit Treatment Agency.
The Ministry of Finance and the Agency for the Management of Guarantees and Outstanding Loans are responsible for the implementation of this decision, and it enters into force upon publication in the Official Gazette.
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