ent to a level far above the average.
New regulations issued about mid-1970 raised the interest rates,
established greater uniformity among them, and introduced a
differentiation among penalty rates based on the length of time that
repayments remain in arrears or credits in excess of those planned are
used. As a result of these measures, National Bank officials expected
the average rate of interest to rise to 3.8 percent.

A uniform interest rate of 5 percent was established on all operating
credits for inventory and production purposes in economic sectors other
than agriculture. Preferential rates for artisans' collectives were
abolished on the grounds that the collectives had received enough state
support in the past to place them on an equal footing with state
enterprises with regard to credit. A rate of 3 percent was continued on
credits used in the distribution of goods. Interest rates of 4 percent
and 2 percent, respectively, were established for state and collective
farms.

The government attaches great importance to the penalty feature of the
credit system, which allows it to discriminate between efficient
enterprises that find themselves in temporary difficulties and
enterprises that are poorly managed. Enterprises that require operating
funds in excess of those prescribed by officially determined norms or
are unable to repay credits on time must pay progressively higher
interest rates. Excess and overdue credits carry an interest rate of up
to 10 percent for the first three months and up to 12 percent for the
next three months. Enterprises in the second stage are subject to a
searching examination by a committee of experts and may be denied
further credits. Information is lacking on the procedures followed in
the case of enterprises that would be declared bankrupt in a Western
economy.

According to a National Bank official, the new credit regulations were
to be rigorously applied in order to combat a rising trend in the volume
of overdue credits that became apparent in the first half of 1970. The
credit and interest policies were to be applied in a manner that would
protect the economy from the bad effects of mismanagement and that would
place the onus only on poorly run enterprises. This task was said to
demand a high level of competence from those called upon to resolve the
difficult problems of the enterprises.

CURRENCY

The currency unit of the country is the leu (plural, lei), divided into
100