Indebted Romanians face their own credit crisis

By Marius Zaharia

BUCHAREST (Reuters) - If it wasn't for the sharp drop of Romania's currency in September on the back of world financial troubles, Bogdan Voinea would be driving a new car now.

"When I open the newspaper in the morning, I don't read politics any more, I go straight to the exchange rate page, hoping for good news. I need a car," said Voinea, a 39-year-old architect who lives in Bucharest.

Like many Romanians who are seeking a better life after decades of shortages under communism and botched reforms after the country's 1989 revolution, Voinea has been borrowing heavily.

He hopes global credit jitters will subside soon, allowing the leu currency to rise and making low-interest loans in euros affordable for him again.

But economists warn Voinea and thousands of other Romanians, who are eagerly sinking into debt, to learn a lesson from the turbulent summer and step away from banks' lending counters.

Without some slowdown in rampant consumer lending, particularly loans in hard currencies, the emerging economy faces a serious risk of overheating that could destabilize its financial system and erode the economic gains of the post-communist era.

"It's a good thing the financial shock in the U.S. happened now. It opened many people's eyes," said central bank Chief Economist Valentin Lazea.

Standard & Poors rating agency said recently that Romania, with its rampant domestic borrowing, is among countries in Europe, Middle East and Africa which are most at risk of a negative fallout from tighter global credit conditions.