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Dumitru: the level of indebtness is high with the population and the companies,needing capitalisation
The degree of indebtness is high in Romania both at the level of population where the debt service in the available income is among the highest in the EU and for companies where more than a third of the profitable companies have banking loans, Ionut Dumitru, head economist with Raiffeisen Bank says.
‘With the population the debt service as a percentage of the income is high, and we are in the top, the second country after Cyprus. The explanation results from the structure of the loan, consumption loan with average maturities of five years, and interest significantly higher than with the mortgage one, thus a debt service high enough made the indebtness degree to be high enough. In Romania we have an indebtness degree high enough in the area of low income. The service debt in that area is over 60%. If we refer to those who are indebted, as 18% is for the whole of the active population, the indebtness degree is over 35%’ Dumitru explained in the ‘Conference on Country Risk Coface 2014’ organised on Wednesday by Coface and Mediafax.
Dumitru explained that with companies as well, if we have the balance between debts and capital we notice the degree of indebtness is high enough against the other European states.He showed that out of the 450,000 active companies, only 250,000 have profit, and if we refer to this figure, the share of the companies with banking loans which is over a third.
He also showed that in Romania default is an ‘abuse’ which very many companies apply, over 5% of the active companies, while the average of those in Central and Eastern Europe is ten times lower, only 0.5%.