Romania’s foreign debt was generated by the population overborrowing and not by banks, says central bank governor

Romanian central bank governor Mugur Isarescu came to the defense of local lenders this Wednesday, saying that Romanians are to blame for indebting the country and not the banks. “Banks acted as intermediaries, luring their clients at the most (…), but they didn’t borrow money in order to indebt the country; the citizens were the ones who took loans,” Isarescu told a banking forum.

Isarescu said the bulk of the EUR 22 billion foreign financing attracted by the commercial lenders was addressed to local loans, pointing out that about 4.5 million Romanians, about half of the country’s workforce, have contracted loans in the last few years.

“Romanian banks have foreign assets of EUR 2 billion, while their domestic assets reach EUR 50 billion. In other words, the banks did their job on the local market (…). Therefore, the banks in Romania are only to be blamed, to use a strong word, for EUR 22 billion out of a EUR 90 billion external debt,” he added.

Public debt represents only about EUR 19 billion of the country’s external debt, a “manageable” level as well as that of the central bank’s foreign exchange reserves, said Isarescu.

Simona Bazavan

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