Asking for loans from the Mes, the European Stability Mechanism, from the point of view of costs could be cheaper than asking for them on the market using national bonds. Indeed, according to a study published by Mes himself, for 11 countries, including Italy, on the seven-year maturity the rates would be even negative, while over 10 years, they would still be lower than those guaranteed by the bonds.
Going into detail, over 7 years, Italy as of 26 May was in debt at 1,34% while a loan to the Month would have a negative rate: -0,07% (with negative rates, in other words, you get a refund). As for a loan with a 10-year maturity, by issuing a national bond Italy would end up with a rate of 1,64%, while with the Mes loan it would drop to 0,08%.
“The negative rate on our loan means that the countries that will use it will receive a payment, they will be paid to go into debt: and this is positive for citizens, for taxpayers, because it reduces the tax burden. This makes this line of credit very attractive,” explained ESM Chief Financial Officer Kalin Anev Janse.
For 7-year bonds, it would be Greece above all to benefit from the most convenient rates, followed by Cyprus and Italy. Spain, Portugal, Malta, Slovenia, Slovakia, Latvia, Lithuania and Ireland are also on the same boat. For a 10-year loan, the greatest benefits would again go to Greece, followed by Italy, Cyprus, Portugal, Slovenia, Malta, Lithuania, Latvia, Ireland. “In the current market conditions, for some countries the cost savings could reach 6 billion euros over the 10 years”, concludes the analysis of the Mes.
For the moment, Italy has not yet decided whether to exploit the potential of the Mes or not. Responding to a question from journalists, the Prime Minister Giuseppe Conte, he said: “We will ask to participate in the Sure project, where around twenty billion will be allocated to social safety nets. We will participate in the Bei project. As for the Mes, I'm quite stubborn and don't change my mind overnight: when we have all the regulations I will study them and bring them to parliament. And we will decide with Parliament".
“Since it looks like free money, let's remind everyone that it's a loan. When there is a loan, a lot depends on utility and convenience, on the conditions that are made”, concluded the premier who pretends not to perceive the convenience on the figures and on the actual savings for the state.
