LAZEA, NBR Romania's total private debt is about 70% of the GDP

Romania's total private debt is about 70% of the GDP, Nicolae Lazea, the chief-economist of the NBR said yesterday in a press conference. He said that this makes it one of the lowest levels in Europe: According to European regulations, the total private debt should not exceed 160% of the GDP. Therefore, Romania is at a comfortable level".

Countries such as Italy and Ireland have a total private debt of 300% of the GDP, and countries such as Cyprus or Belgium- 200% of the GDP.

The chief -economist of the NBR said that from a macroeconomic point of view Romania is doing well when it comes to the private debt, a detailed analysis shows a paradoxical situation. Valentin Lazea explained: "The total debt of the individuals is somewhere around 20% of the GDP. But the effort of the individuals to service such a debt is great. If we look at the debt/revenue ratio, Romania is near the European median, with a percentage of 70%. This paradox between the macroeconomic and microeconomic picture can be explained by the fact that the individuals in Romania are far poorer than in other European countries".

Mr. Lazea said that banks have been accused lately of no longer lending to companies and individuals, but the reduction in lending has also been caused by a drop in demand lately.

The private debt of companies in Romania amounts to approximately 50% of the GDP. A review by sectors presented yesterday by the chief-economist of the NBR shows that sectors such as services and trade have an exposure to foreign currencies (loans versus their own capital) of 40-50%, which represents a good level. But the exposure of the real estate sector exceeds 100%.

Valentin Lazea also said: "The evolution of real estate prices presented by the National Statistics Institute shows that in Q4 2011, when compared to 2009, prices have reached a bottom and they have subsequently stabilized. If the stabilization is confirmed in time in the coming period as well, then the real estate may see a turnaround".

Romania meets three of the five criteria of the Maastricht treaty, namely the ones concerning the exchange rate, the deficit and the total public debt. According to Mr. Lazea, we do not yet fulfill the inflation rate criterion, where we are above the maximum allowed inflation rate by 0.6%. Romania also doesn't meet the criterion concerning the long term interest rate, which exceeds the requirement of the Maastricht Treaty by 3.1%.