The country’s economy grew above potential, boosted by mainly by consumption, deepening the budget and current account deficits, said central bank deputy governor Liviu Voinea, adding the fiscal space brought about by tax relaxation in 2016 has been exhausted in 2017.
Voinea said imbalances in the economy influence interest rates, the currency exchange rate and inflation and consequential higher household debt is one of the main risks to the country’s financial stability.
The central bank official said macroeconomic tension and higher household debt are moderate risks and the country doesn’t face any major systemic risk to its financial stability.
Eugen Radulescu, head of the central bank’s financial stability department, said a two percentage point growth in interest rates on mortgage loans have raised the debt degree among low-income debtors to 75% of their income from 65%.