To successfully weather the economic crisis caused by the coronavirus, the euro-zone countries should borrow more than 1,000 billion euros this year in the medium or long term. Loans that raise several questions, starting with the ability of some states to be able to repay after the epidemic.
The economic response to the coronavirus crisis will translate into an explosion in the debt of the eurozone countries, to levels never seen before.
Levels that make you dizzy indeed: the euro area countries will borrow just this year more than 1,000 billion euros in the medium or long term, and about 400 billion in the short term. These are sums, to locate things, which roughly correspond to the national wealth of a country like Spain.
This raises a first question: who will lend us such sums? Answer: the big traditional investors, insurers, foreign pension funds ... And as that will not be enough, the European Central Bank, the ECB, will in fact absorb all this debt. This is why even countries that are already over-indebted like Italy will be able to continue borrowing.
The other question that raises is how are we going to reimburse all these amounts?
This is the real question. There will be a second round. Remember the 2012 eurozone crisis. Several countries saw their debt explode like today: Spain, Ireland ... The sanction arrived soon after: their interest rates soared. Are we going to see the same thing this time? For the moment, the ECB is keeping an eye on things, rates remain low, even in Italy.
But the question of the ability of countries to repay this mountain of debt will arise. It is not impossible that one arrives as for Greece to restructure this debt, that is to say to spread it even to cancel a fraction of it. But what could have been done on the scale of Greece would be much more painful in the case of a large country like Italy. The financial consequences of the crisis are before us.