SAN MARINO – The internet also dampens enthusiasm about the replacement of the debt, and on balance, it attests to how the enthusiasm of the government and the majority is excessive: “Last week the government announced in triumphalist tones the placement of a new five-year bond of 350 million at 3.625%. An operation which, in fact, will entail an annual outlay of 12.7 million euros in interest, replacing the previous bond at 6.5%, which cost 22.7 million.
If it is true that the rate reduction represents a positive result, it is equally true that the government carefully avoids telling the whole truth: for a good nine months, until the old bond expires in January 2027, the country will be forced to pay interest on two debts at the same time. In other words, the first 10 million of much-vaunted “savings” will in fact be burned to cover the cost of the new debt, effectively canceling the immediate benefit of the operation.
For years we have been proposing a simple and common sense solution: introducing a “call option” clause that allows the early repayment of the old debt when the new one is issued, avoiding this unacceptable double disbursement. This time too, however, the government chose to ignore the proposal, once again demonstrating a worrying lack of vision and responsibility in the management of public finances.
Not only that. We have also been asking for some time to seriously evaluate a renegotiation of foreign debt on the internal market. Today the system has over 1.4 billion in liquidity: issuing a domestic bond at 2–2.5% would mean guaranteeing the State more favorable conditions and, at the same time, passing the interest on to citizens, who currently invest in instruments such as certificates of deposit with yields just above 1.5%. A choice that would support the internal economy and reduce the overall cost of debt. But the path of internal debt reconversion continues to be stubbornly ignored and practiced to a minimal extent for only 50 million per year.
There is very little, therefore, to celebrate. Debt does not disappear: it must be repaid. And while propaganda announcements multiply, the costs of the Public Administration are out of control and those of the ISS continue to grow without a credible containment plan.
The irresponsible message that has been spread in recent years is clear: “you can spend it, there is money anyway”. A dangerous narrative, which risks seriously compromising the country’s financial sustainability”, concludes RETE.
