Ordinary Joe no cure for Italy's debt disease
As Italy's already massive public debt soars further due to the coronavirus crisis, its authorities are calling on ordinary citizens to help fund recovery efforts. The plan could aid immediate financing needs but will do little to allay eventual default risks. Italy's public debt has long been seen as a fault-line forthe survival of the euro zone, and analysts say the pandemic is raising fresh questions about the sustainability of Rome's borrowings. For now, even with a debt which economists see heading towards at least 170% of national output this year, Italy is safe thanks to the European Central Bank's massive bond purchases, recently expanded under its Pandemic Emergency Purchase Programme (PEPP). But a day of reckoning for the euro zone's third largesteconomy looks inevitable, analysts say. The country proved unable to lower the world's third highest debt mountain even during economic good times - and it cannot rely on the ECB forever. "Who will buy our debt when the ECB stops? That is something nobody even wants to think about," says Roberto Perotti, economics professor at Milan's Bocconi University. RTRS
