Montenegro Plans Rescue for Swiss Franc Borrowers

Montenegro's parliament is due to debate a law on converting increasingly expensive loans in Swiss francs into loans in euro.

The law aims to help hundreds of borrowers who have been hit hard by the Swiss currency's sharp appreciation in January.

The proposal envisages that the cost of converting the loans should be divided between the borrowers, the banks and the state. Commercial banks and the state should pay 66 per cent and borrowers 34 per cent of the total conversion cost.

Around 3,000 Montenegrins have contracted fran-denominated loans. Most were taken out before 2008. They are now struggling to pay much higher monthly payments on loans for cars and houses taken out in francs.

Borrowers' monthly installments are now up to 80 per cent higher than the initial sum. Some have increased from 500 to 900 euros, consumer organisations have claimed.

The draft law on the conversion of loans in Swiss francs, which was proposed by the main opposition Democratic Front, received support from the parliamentary legislative committee last week, but the vote has been delayed until official opinions are received from the Ministry of Finance and the Central Bank.

One of the proponents of the legislation, MP Nebojsa Medojevic, said parliament must act quickly because Montenegro does not have its own currency - unlike Croatia and Hungary - which have already frozend the Swiss franc exchange rate.

"That is why we proposed the assembly intervene and protect citizens in a fair and efficient manner," Medojevic said.