The higher key rate has led to appreciation of the leu and a rise in interest for loans and deposits, prompting a boost in arrears.
In the first quarter of 2008, arrears rose 134 compared to Q1 2007, up to €465 million, while the loan balance rose a mere 63 percent, to the equivalent of €50 mln.
Arrears for lei-denominated loans rose more than those for loans in foreign currencies. This is due to “consecutive rises in the key rate, which translate to [higher] commercial bank interest. When the exchange rate depreciates and interest rises, the major impact is on people with low income,” ING Bank Romania Senior Economist Nicolaie Alexandru-Chidesciuc told Business Standard.
The national average of arrears is close to one percent of total loans. Statistics published by BNR show that certain counties, such as Ialomita and Brasov, registered arrears that are double the average.
Areas with most debts are Bucharest, which alone makes up for 29 percent of arrears, followed by Brasov, Timis and Bihor.
High figures in several counties are due mainly to corporate arrears, while the financial behavior of individuals is relatively similar in all areas.
The central bank is trying to curb lending, especially for individuals, by introducing new regulations to be finalized in two weeks.
