The Central Bank publishes report on Romanian economy

In its latest financial stability report, the National Bank of Romania provides a thorough analysis of Romanias economic situation.

Mihai Pelin, 05.12.2017, 13:02

One of the conclusions of the annual report published by the National
Bank of Romania is that financial stability is a solid element in Romanian
economy. The report highlights both the strengths and the weaknesses of the Romanian
economy. One of the strengths is the low public debt stock, which accounts for
37.4% of the GDP. Also, the existence of important international reserves, a
high economic growth rate in the first 9 months of the year and the drop in
unemployment can also be considered economic strengths. As regards
vulnerabilities, the Central Bank draws attention to the fact that there are
development gaps between Romania’s regions, which can grow even wider unless
structural reforms are implemented. Romania is also faced with foreign
investors losing trust in the local economy and the potential occurrence of
macro-economic imbalances.

According to the Central Bank Vice-Governor Liviu Voinea, what is
worrying is the degree of indebtedness of the population and the lack of
financial discipline in the economy. He presented several measures aimed at
reducing such threats. Liviu Voinea:

These measures include lowering the risk of public
debt refunding, including by means of increasing the maturity of debt instruments,
putting the structural deficit in line with the medium term objective,
increasing debtors’ capacity to deal with unfavourable circumstances and
re-capitalising equity companies under the minimum regulated threshold.

On the other hand, the Central Bank recommends a
revision of the requirements for the first-time homebuyer programme, in order
to make it accessible to people with relatively low incomes. In Liviu Voinea’s
opinion, the economic environment has changed considerably since the launch of this
programme. Liviu Voinea:

The pace of economic growth has changed, exceeding
its estimated potential. The banks’ balance sheets are much more clearer, which
means there is room for more credits, without requiring government guarantees.
However, it’s important to acknowledge the need for social policies, targeting
in particular those for whom saving for a down payment is difficult. So, this
programme can continue, but only if it is better targeted, so as to benefit
people who earn less than the average salary.

This governmental programme allows those who want to
buy or build a house to get a mortgage loan guaranteed by the state by up to
50%. In September this year, the loans contracted under the first-time
homebuyer programme accounted for 62.5% of the total volume of mortgage
loans.