Facebook Blogging

Edward Hugh has a lively and enjoyable Facebook community where he publishes frequent breaking news economics links and short updates. If you would like to receive these updates on a regular basis and join the debate please invite Edward as a friend by clicking the Facebook link at the top of the right sidebar.

Friday, August 24, 2007

Romanian Private Debt

From Bloomberg this morning:

Romanian Private Debt Rises an Annual 46% on Borrowing in Euros

By Adam Brown

Aug. 24 (Bloomberg) -- Private debt in Romania increased an annual 46 percent in July as a strengthening leu encouraged individuals and companies to take loans in foreign currencies.

Debt rose to 115 billion lei ($48 billion) as of July 31, the Bucharest-based National Bank of Romania said in an e-mail today. The increase in July from June was 5.2 percent, the bank said.

Total outstanding loans in foreign currencies, mostly in euros, increased an annual 50 percent to the equivalent of 55.8 billion lei while leu-denominated loans increased 43 percent to 59 billion lei, the central bank said.

The leu has risen 22 percent against the dollar and 15 percent against the euro in the past year, making loans in those currencies easier to pay for Romanians. Average net wages have also risen 22 percent, giving them more borrowing power, and the key interest rate fell to 7 percent from 8.75 percent.

The central bank said corporate debt in foreign currencies rose 31 percent in the year through July and individuals' debt increased 87 percent. Corporate debt in lei increased 38 percent while private citizens' burden in lei rose 48 percent.

Central bank Governor Mugur Isarescu has said he's worried about the increasing debt burden in foreign currencies, which could create problems for lei-earning borrowers if their currency suddenly weakens.

The bank said yesterday the debt load of Romanians who have fallen behind on loan payments by more than 30 days doubled in the year through June to 430 million lei.

No comments: