Page 79 - Monaco-Economy-118

Covid and debt: taking into account how the inherent

wealth of States can increase financial resources

The streams of cash being poured out by Western countries to offset seriously modify the estimation of the assets of the States, which in
the economic and social consequences of the dramatic slowdown his opinion are extremely deceptively underestimated by the public
in activity due to the Covid 19 epidemic has obviously resulted in an accounting rules laid down by the IMF and the stipulations of the
huge ballooning of public debt. Maastricht Treaty.
And now newspapers, TV and radio are flooded with experts who “Currently, only the level of its gross domestic product is posted as
predict that these mountains of debt will inexorably lead to massive an asset of the State. Everything else that constitutes its wealth
new taxes and devastating inflation, while others claim high-handedly does not count. The roads, the national maritime waters, the canals,
that only a cancellation of the new debts could remedy this - in short, the health services, etc. are not counted, on the grounds that these
declare bankruptcy to regain prosperity: a new concept ... assets are not marketable, although they generate income. It is easy
Faced with this issue, Paolo Di Gaeta, specialist in international finance to imagine that the debt ratios of the States would be considerably
and political science graduate, has the confidence of someone who reduced if this were not the case, and to what extent their possibilities
sees a superb opportunity presenting itself during this period: to of refinancing would be boosted since the guarantees would be
change gears in the method of estimating and managing state debt, increased. Yet to assess a business and its borrowing capacity we
while posing an intangible prerequisite beforehand: above all we must do not only take into account its turnover but also its land holdings,
not go down the debt cancellation road. patents, machinery, etc.”
“Governments and their countries would lose credibility with both Finally, in order to start reducing the debts of the industrial States by
financial markets and individual investors for a long time to come. bringing in fresh money without having to go through the “new taxes”
Absolutely no future can be built without trust” he asserted. box, Paolo Di Gaeta comes back to the example of road networks,
excluding toll motorways, since the use of these is already “privatised”
The example of the road network to some extent.
According to Paolo Di Gaeta, as necessity knows no law, the worsening “A 2014 study carried out by the Association of Italian Road Companies
of sovereign debt levels should finally create the opportunity to revealed that the peninsula’s road network (540,000 km) generates
an annual income of 100 billion euros for
the country’s coffers. This sum is reached
by adding the taxes on gasoline (since they
come from motor traffic on these roads)
and the revenue from property taxes on the
properties (since many roads are needed to
access the houses, the companies, etc.).
So why not issue 100 billion patrimonial
securities over a long period, over a hundred
years for example, at an interest rate of 3%,
which is particularly attractive these days,
and the proceeds of which would be entirely
earmarked for the reduction of public debt.
Insofar as this loan is guaranteed by an
absolutely reliable tax revenue and that, in
any case, the borrowers could monetsise
their bonds on the financial market at any
time, such an operation would inevitably meet
with success amongst investors and would
constitute a completely painless means,
fiscally speaking, of contributing significantly
to the reduction of the State debt”.
So here’s an idea: how will it resonate?

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