October 23, 2019 / 1:11 PM / a month ago

Slovenia's economy minister opposes central bank's new curbs on consumer lending

LJUBLJANA, Oct 23 (Reuters) - Slovenia’s economy minister criticised the Bank of Slovenia’s decision to impose stricter restrictions on bank consumer loans from next month, saying they could slow down the country’s economic growth.

“We cannot afford for (the) majority of (the) population to be unable to take on credit in spite of rising income as that would paralyse our consumption which is an important pillar of economic growth,” minister Zdravko Pocivalsek said in a statement on Wednesday.

The Bank of Slovenia announced earlier this month that it would impose restrictions on consumer loans from November in order to curb excessive credit growth, as the annual growth of those loans exceeds 10%.

Under the new restrictions, a borrower’s annual debt repayment and interest costs combined will not be able to exceed 67% of the borrower’s net income, including for mortgages. In addition, consumer loans, excluding mortgage loans, will have a maximum maturity of seven years.

“These measures are simply too strict,” said the minister, and called for a meeting with the Bank of Slovenia and commercial banks on the issue.

The Bank of Slovenia gave no immediate comment.

The government expects Slovenia’s export-oriented economy to expand by 2.8% this year, versus 4.1% in 2018, based on growth of exports, investments and household consumption.

Official data on Wednesday showed that consumer confidence in Slovenia fell this month to the lowest level since July 2016 as people became more pessimistic about the economy and employment prospects. (Reporting by Marja Novak; Editing by Susan Fenton)

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