Romania could reduce the non-performing loan ratio below the average of the countries affected by the financial crisis in the next two years, said Reza Baqir, head of the IMF mission in Romania.

At the peak of the crisis, the NPL rate reached 22% in Romania, although the average amounted to 12%, reports local Economica.net. However, the country has managed to faster reduce the ratio of bad loans compared to other countries with a high NPL ratio.

In Romania, the non-performing loan ratio dropped from 21.5% in September 2014 to 13.5% in March this year, according to Romania’ National Bank – BNR data. In the euro zone, the bad loans ratio amounts to 6%. This represents a trillion of euros, or 9% of the GDP.

Romania’s National Bank Governor Mugur Isarescu pointed out that Romania hasn’t used any public funds to solve its bad debt problem, like other countries have done.

The central bank has made three critical decisions that have led to a stabilizing of the market and the NPL level drop. Via the Vienna agreement, in 2009, foreign banks agreed not to withdraw their money from Romania. Then, in 2013, BNR asked local banks to have their guarantees reevaluated by external auditors. Next, the central bank asked local bankers to provision the non-performing loans.

editor@romania-insider.com