Moratorium on loan and leasing payments for agricultural producers: is it going to work?

On 29 January 2024, the Government Emergency Ordinance no. 4 of 25 January 2024 (GEO 4/2024) issued by the Government of Romania came into effect, through which the Government aimed to introduce support measures for Romanian debtors, agricultural producers, facing financial difficulties due to the effects of the soil drought phenomenon of 2023 and of Russia’s aggression against Ukraine.

Who can apply for the moratorium? The provisions of GEO 4/2024 shall apply to agricultural producers (debtors) who are natural persons, authorised natural persons, individual enterprises, and family enterprises[1], as well as legal entities agricultural producers, as indicated in the ordinance[2], directly or indirectly affected by the soil drought phenomenon of 2023, as well as in the context of the previously described geopolitical crisis.

Object of the request? Debtors may request the moratorium to their lenders, banking institutions, or non-banking financial institutions (including branches of foreign creditors or financial institutions operating in Romania) resulting from loans and/or leasing agreements concluded with them. The payments in question can represent capital instalments, interest, and/or fees due in 2023, with the deferral period to be indicated by the debtor but shall not be less than one month and shall not extend beyond 31 December 2024. Loans and/or leasing agreements concluded with other types of lenders (e.g., international financial institutions, credit institutions operating under the freedom to provide services, unregulated companies) are not included in the scope of GEO 4/2024.

Requests for the moratorium shall be made within a maximum of 60 business days from the entry into force of GEO 4/2024 (i.e., 29 January 2024).

Preliminary conditions for the request:

The debtor can benefit from the moratorium only if the following conditions are met:

  • the loan or leasing agreement was granted before 29 January 2024;
  • the loan was not overdue, or the lender has not accelerated the loan prior to 29 January 2024; and
  • the loan was granted for agriculture and the food industry activities.

The request shall have attached an affidavit signed by the debtor and supporting documents requested by the lender, evidencing that the debtor’s income was affected by the two previously described crises. However, GEO 4/2024 does not expressly specify what type of documents the lender could request to obtain the necessary information for the internal decision-making process, this legislative gap leaving room for various interpretations and potentially giving rise to non-uniform practices, thus hindering the process for all the parties involved.

It is also mentioned that the debtors can benefit from this measure only if they have previously engaged in negotiations with the lenders, which have failed or were unduly prolonged. In this situation, the law-maker failed to provide key information for interpreting this condition, such as: ways to prove the existence of negotiations, the form in which such should have been conducted to represent a valid criterion, or what is meant by an unreasonable period within the meaning GEO 4/2024.

Is the moratorium mandatory for the lender? NO

The provisions of GEO 4/2024 may give the impression that the moratorium shall be granted at the mere request of the debtor, if the claim subject to the request complies with the conditions laid down in GEO 4/2024. However, granting the moratorium remains at the discretion of the lender, which has 30 calendar days to consider the debtor’s request. The lender can either approve or reject such request, and it does not have the possibility to propose another deferral period than the one requested by the debtor, as it appears from the wording of the ordinance. GEO 4/2024 puts additional pressure on the lenders by forcing them to also provide the debtor with the loan documentation reflecting the contractual changes implementing the moratorium within the same 30 calendar day period, if they approve the request of the debtor. For this reason, the lenders may be more inclined to refuse the moratorium requests under GEO 4/2024 and continue negotiation discussions outside this legislative framework as GEO 4/2024 is vague on the grounds for refusal that the creditors can invoke.

Are there any financial implications for such payment moratorium? YES

Interest shall continue to accrue during the moratorium period for the amounts whose payment has been deferred. The interest thus accumulated will be capitalised at the end of the deferral period, added to the loan balance and will generate further interest. The increased capital will be paid in instalments as agreed with the creditor until the new maturity date of the loan.

What next? GEO 4/2024 fails to create a clear legislative framework for the provision of effective support mechanisms for agricultural producers. It remains to be seen whether this will be remedied by the issuance of implementation rules or whether GEO 4/2024 will undergo a revision by the Romanian Government or Parliament, taking into account how these demands will be handled in the future. For now, in practice, agricultural producers will have to continue to negotiate with the lenders and find the best option on a case-by-case basis to achieve the effects declared by GEO 4/2024.


[1] Authorised natural persons, individual enterprises, and family enterprises are those operating according to Emergency Ordinance no. 44 of 16 April 2008

[2] Small and medium-sized enterprises, agricultural companies, companies regulated by Law no. 31 of 16 November 1990 on companies, groups and producer organisations, organised agricultural cooperatives, bodies/organisations for variety testing, research, respectively universities, institutes, and research-development stations in the agricultural field, as each of these forms of organisation is regulated in the special legislation.


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