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BNR: Private external debt is a major worrying factor

Private external debt is a major worrying factor, Deputy Governor of the National Bank of Romania (BNR) Cristian Popa said on Friday upon presenting the BNR quarterly inflation report.

He told Agerpres that short-term private external debt is making up 16 percent of the Gross Domestic Product (GDP), while the long-term one is accounting for 24-25 percent of the GDP, while the total public debt, both external and internal, is just 15 percent of the GDP.

'This is in the end the business of the companies, but poor management of debt settlement could have public consequences,' said Popa.

The BNR officials said the private external debt is run by nearly 2,000 companies, which is 0.4 percent of the total of companies operating in Romania.

Romania's short-term external debt, public and private, is standing at 21-22 billion euros, making up 80 percent of the total international reserves. Popa puts the great share of the blame for this debt on commercial banks, which he said take out loans from their parent banks outside Romania and such credit lines could be rolled over.

'It is quite unclear whether the amounts extended by the parent banks to the banks operating in Romania will be rolled over and to what extent,' said Popa, adding that 2009 and perhaps even 2010 will be difficult years for the world's finances.

On the other hand, said Popa, Romania has not had problems, unlike other countries, as far as forex liquidity of the banks are concerned, because of the statutory forex reserves of 40 percent that are requested for external liabilities.

'When the banks have to pay back the loans to their parents, they will have to raise only 60 percent of the amounts, since 40 percent of the total amounts is kept with us,' said the BNR deputy governor.

 

Sursa: http://www.rompress.ro

Tags: external banks percent romania bnr private

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