Labour tends to zero in terms of contribution to potential GDP. When employment rate increases but does not converge

The employment rate of Romanian population aged between 20 and 64 years was 68.8% last year, according to data released by Eurostat. This figure was… Mai mult

Convergence of wages versus price convergence

The living standard in Romania increased significantly due to an accelerated wage convergence compared to the EU average and the stagnation in price convergence toward… Mai mult

BNR raises inflation forecast for 2019 to 2.9%. Among risks: “unpredictably” administered prices

The National Bank of Romania (BNR) has maintained the inflation forecast for the end of 2018 at 3.5% but has raised the forecast for 2019… Mai mult

Serious problem of wealth distribution in society: How Romanians came to having lowest median income in EU

Eurostat has published the most recent data of EU member states on median net income by household. Romania ranks last in 2017, with only EUR… Mai mult

Adapting pensions to economy and society – Romania’s position within international context by four benchmarks

According to OECD data, net pension wealth in Romania (calculated for 2016) was 8.3, a value significantly below the average of 12.3 recorded at the… Mai mult


BNR – Risk map: Credit default risk got right to “high” level top position

de Adrian N Ionescu , 18.6.2018

The deterioration of investors’ confidence in emerging economies and the default risk of loans to companies and population are the biggest risks to financial stability in Romania, according to a report published on Thursday by the National Bank of Romania (BNR).

The default risk of non-governmental loans is a new entry on the risk map (in this form) and directly positioned at the high systemic risk level, according to the first report of this year on the financial stability.

The current report also includes companies in this risk, compared to the previous report, which had only identified the risk of “the increasing population’s indebtedness.”

The credit default risk trend is stagnant, while the risk of investor confidence’s deterioration is on the rise, unlike the report in December 2017, when the outlook for this latter risk was stagnant.


  • The map of risks to financial stability in Romania
  • Deterioration of investors’ confidence in emerging economies
  • Default risk of non-governmental loans
  • Increasing tension in the macroeconomic balance
  • Low payment discipline in the economy, vulnerabilities in companies’ balance sheet
  • Increase in the real estate prices
  • Severe systemic risk  High systemic risk      Moderate systemic risk          Low systemic risk


Of the other three risks, “Low payment discipline in the economy, vulnerabilities in companies’ balance sheet” (moderate) has entered a growing trend compared to the previous report, and the increasing tension in macroeconomic balances maintains its increase prospect.

The outlook for real estate prices is steady.

Confidence deterioration

“A rapid deterioration of investors’ confidence in emerging markets is the most important risk for the next period,” says the BNR report.

The main factors influencing this risk are:

  • The normalization of monetary policies of the main central banks at a faster pace than anticipated by investors, amid increased inflationary pressures or worries about the rate of economic growth;
  • trends in the global trade, in the context of the adoption of some protectionist measures;
  • Uncertainties about Brexit and new trade agreements;
  • adverse and sudden market reactions that have the potential to generate significant contagion effects and feed other vulnerabilities existing in the financial system.

“These developments have also been reflected in the temporary increase in costs of financing the states, both in emerging countries (such as Romania) and in developed ones (such as Germany, whose bonds are a benchmark including for our country), ” says the report.


Evolution of the return of state bonds denominated in RON on the secondary market, depending on maturity             Return of state bonds with a 10-year maturity

The BNR Governor has stated that there is no unanimously accepted definition of the normalization process of monetary policies and interest rates are still low in Romania.

Credit default risk

Although the risk of default has not materialized, it is a vulnerability that can be manifested in the context of the global trend of interest rate levels returning to historical trends,” the NBR report said.


  • Annual probability of default in the basic macroeconomic scenario
  • Mortgage loan Consumer loans


The risk of default is the result of factors related to:

  • payment discipline in the economy;
  • the suitability of bank lending standards to the moment of granting the loans;
  • draft legislation that has encouraged moral hazard;
  • the volume of bad loans granted to this segment in the national currency resumed an upward trend and increased by 13% (March 2018 versus March 2017);
  • the probability of default on a one-year horizon (March 2018 – March 2019) resumed an upward trend;
  • the total debt of the population continued to increase in nominal terms in 2017, mainly due to the significant rise in the mortgage credit (+ 13%, in median value, March 2018/April 2017) and the consumer credit (+ 17%);


  • Total debt of population
  • Billion RON     % of GDP
  • Consumer credit CI    IFN consumer credit
  • Balance of assigned consumer credit            Mortgage credit CI
  • IFN Mortgage credit    Balance of assigned mortgage credit
  • Credits removed from the balance sheet       Total debts of population (% of GDP)


  • the debt/income ratio (DSTI) of debtors earning between the regulated minimum national wage and the average national wage is significantly higher than the ratio for people with higher incomes;
  • a possible increase of 10 percentage points of DSTI would lead to a 6% increase in the probability of default for the mortgage credit and by 3% for the consumer credit.
  • the bad loan ratio for the loan portfolio with DSTI over 60% is 10%, twice the value of the entire portfolio of exposures to the population.

“In this context, the asymmetry of the indebtedness by income remains an important concern, as the DSTI for debtors earning between the regulated minimum national wage and the average national wage is significantly higher than for people with higher incomes,” the BNR report said.

Increasing tension in macroeconomic balances

The risk continued to manifest especially related to the evolution of twin deficits.

“The intensification of the aggregate demand in the national economy led to the deepening of the current account deficit and the impulse generated on imports eroded the favourable effect of the accelerated export growth”.

The budget deficit is at the maximum threshold of 3% of GDP

The structural deficit has deteriorated to 3.3% of GDP in 2017 (from 2.1% in 2016), above the medium-term target of 1%, and is projected to reach 3.8% at the end of the year 2018.


  • Increasing tension in macroeconomic balances
  • Structure of goods balance deficit      Share of the current account balance in GDP (2017)
  • Note: Grouping of goods was made based on the classification by Large economic categories (MCE), according to statistic methodology of international trade of goods


The polarization of the economy is significant: top 100 firms accounted for about 47% of the aggregate net result for the whole economy (compared to 42% in June 2016), while top 100 companies by the level of negative results represent 28% of total losses in the whole economy”.

The BNR is “concerned” with the effect of corroborating the tension from the macroeconomic balance with a potential deterioration in investors ‘sentiment towards emerging markets, an increasing indebtedness of the population and the vulnerabilities in companies’ balance sheets.

All these factors can “generate pressures on the financial stability by amplifying the effects on debtors’ capacity to pay either through the interest rate channel or the exchange rate channel.”

Payment discipline in the economy was mixed: the amount of arrears decreased, while the volume of major payment incidents increased.


  • Low payment discipline in the economy, vulnerabilities in companies’ balance sheets
  • Delays in payments registered by state-owned companies
  • June 2016       June 2017       June 2016       June 2017
  • (billion RON)   (billion RON)   (% of total arrears) (% of total arrears)
  • Intra-company arrears
  • Arrears to the budget
  • Arrears to other debtors
  • Delays in payments registered by private companies
  • Intra-company arrears
  • Arrears to the budget
  • Arrears to other debtors


The main determinants are reduced capitalization in a large proportion of firms, the lax financial discipline or the loopholes in the corporate insolvency.

Besides, the ratio between debtors and creditors got unbalanced, and mutual trust has deteriorated.

The systemic risk generated by rising house prices has lower amplitude but it may amplify the other risks identified, especially related to the rising population indebtedness.

House prices maintain on an upward trend in 2017, similarly to the developments in the region.

These price dynamics translates into the need to access higher mortgage loans, which in the context of longer maturities and greater sensitivity to changes in interest rates might put pressure on the debtors’ ability to honour the debt service”, says the BNR Report on Romania’s Financial Stability.

Mergeți în homepage ›

Publicat la data de 18.6.2018

Lăsați un comentariu


Development strategy / Government squeezes even investment money from its own companies: EUR 120 million from only two entities in energy field

Nuclearelectrica (SNN) and Romgaz (SNG) have calculated the additional dividends to be paid to the state after the Ministry of Finance (MFP) sent to the… Mai mult

DNA, officially: Senate President is suspected of having received a USD 800,000 bribe. Case file opened at a request from Austrian judicial authorities

The case file in which the DNA requested the waiving of the Senate President’s immunity was opened at the request of Austrian judicial authorities and… Mai mult

Illegal state aid / European Commission demands Romania to recover EUR 60 million from CE Hunedoara

Romania has to recover illegal state aid worth EUR 60 million granted to Compexul Energetic Hunedoara, announced the European Commission with a statement released on… Mai mult

Ministry of Finance planned loans of RON 4.74 billion in November. Costs are increasing

The Ministry of Public Finance (MFP) intends to borrow in November RON 4.74 billion, 1.4% more than in the previous month, according to the Ministry.… Mai mult

New 100% Romanian tractor has been launched. Features, endowments, price

IRUM Reghin launched the first 100% Romanian tractor, announced Digi24, designed and built by the company’s engineers, 15 years after the Romanian tractor manufacturing disappeared.… Mai mult

Romanians from abroad sent as much money to Romania as Government attracted from European funds and subsidies

Romanians working abroad sent EUR 2.695 billion to the country in the first eight months of 2018, equalling the European funds and subsidies received in… Mai mult

Bucharest Stock Exchange: European record increase of reference index, old liquidity issues

The main index of the Bucharest Stock Exchange (BVB), BET, registered the second highest increase in the European Union (8.5%) in the first nine months… Mai mult

Estimates of Capital Economics: GDP is losing speed in Q3 as well, growth could be reduced to 3.5%

The first estimate of the economic growth in Romania in the third quarter shows a reduction down to 3.5% (year-on-year), after the previous quarter's Gross… Mai mult

Mugur Isarescu - BNR: Wages should increase by market forces not by politicians

Wage increases should be based solely on productivity growth and be made "by market force", not by politicians, the Governor of the National Bank of… Mai mult

OMV postpones decision to assume an investment in natural gas from Black Sea for next year

Austrian OMV Group postponed its decision on the Black Sea investment for next year, in the context of the offshore law adoption being postponed, Reuters… Mai mult

Justice Minister initiated procedure for dismissing General Prosecutor

Minister of Justice announced on Wednesday that asks for the dismissal of General Prosecutor Augustin Lazar (photo) for 20 reasons (they could be more, Tudorel… Mai mult

Eurobarometer / Romanians who believe that EU membership is a good thing have lost majority position

  The last Eurobarometer of the European Parliament, published in September, shows that 49% of Romanians consider that EU membership is a good thing. Compared… Mai mult

PSD announces consensus with ALDE on offshore law: 50% of production is sold on Romanian commodity exchange, maximum 30% deductions for operators

PSD and ALDE reached consensus on amendments to the offshore law, the leader of PSD deputies Daniel Suciu announced on Wednesday evening and said that… Mai mult

Siegfried Muresan asks for EUR 2 billion from EU post 2020 budget to defend rule of law

MEP Siegfried Muresan (PPE / PNL) has submitted this week an amendment to the European Parliament's interim report on the EU post-2020 multiannual budget and… Mai mult