NBR: Romanians are overindebted

Romanians are finding it increasingly hard to pay their monthly instalments to banks, which now account for 22.4% of the population’s available income in September last year, compared with around 5% at the end of 2004, reveal data from the NBR (National Bank of Romania).

The high indebtedness level and expected continued income adjustment will not allow lending to individuals to be resumed very quickly despite the monetary relaxation signals sent by the NBR, putting more pressure on overdue loans, which trebled in 2009.

“The population’s ability to repay loans continued to deteriorate, which could lead to a rise in the percentage of overdue loans in the future as well, according to Ion Dragulin, manager of the Financial Stability Department of the National Bank.

Romania’s debt-to-income ratio is one of the highest in Europe, considering the average rate of 11% in the eurozone. Under the circumstances, lending to individuals could continue to stagnate in the coming period, with the banks relying on corporate loans and on co-funding for EU-backed projects this year.