The leu needs Euro 2-4 bln to overcome the crisis

Neither the government nor banks will have financing-related problems, but companies could face a financing void this year, warned the Governor of the National Bank of Romania (BNR), Mugur Isarescu.

"Two, three, four billion euro" is the necessary financing for the national currency to overcome the crisis, according to the central bank official, who added that he is considering taking out a loan through the government or the central bank which would solve the liquidity problems of companies.

The private sector must pay installments and interest worth €9.6 bln in 2009, but part of these loans will be extended, the Governor believes. However, for amounts which should be paid effectively, the degree coverage could amount to a mere 60 percent, due to capital entries significantly lower than forecasted exits, said Isarescu. The foreign debt of companies operating on the Romanian market has virtually exploded in the past few years, to €33.65 bln at the end of 2008, from €5.56 bln in 2003. This debt is shared by some 2,000 companies, representing 0.4 percent of total Romanian companies. However, according to Isarescu, the top ten companies have less than 20 percent of the total private debt, adding that the total government debt nears €40 billion, of which €24 bln are short-term debts.

If many companies with such debts are unable to extend their maturities, we can expect pressures on the exchange rate, financial blockage, and even economic recession, according to some economists.

Business Standard