Le State guarantees on bank loans they have a dark side. According to the Bank of Italy, defaults on 450 billion euros of public guarantees activated by government decrees “they could also exceed those of the two-year period 2012-2013, when they approached 10%”. This was stated by Fabrizio Balassone, head of the economic structure service of the Bank of Italy, during a hearing before the House Finance and Budget committees on the Companies decree.
According to Bank of Italy, given "the seriousness of the crisis and the uncertainty about the timing and speed of the recovery of economic activity, the probability of a future enforcement of these guarantees will probably be much higher than in normal conditions". In this situation therefore the "burdens on public finances" increase, which, "although distributed over several years, could be significant".
From the point of view of the companies, Instead, "a part of the losses incurred will not be recoverable – Balassone explained – and not all the debts taken on to deal with the crisis and assisted by public guarantees will be immediately repaid at the end of the health emergency”.
Consequently, it will be affected "corporate leverage – he added – their vulnerability and, ultimately, their ability to undertake the necessary investments to accelerate the economic recovery”.
All these risks, according to Balassone, "can be contained if, compatibly with the general conditions of the public finances, the granting of guarantees is accompanied" by other measures. That is to say:
- direct transfers to companies by the state to cover loss of revenue and operating expenses;
- transactions conducted by public financial vehicles set up to facilitate corporate debt restructuring;
- tax incentives aimed at facilitating recapitalisation.
Measures that will be "all the more effective the more they are based on simple, transparent and automatic mechanisms", Balassone specified again.
As it regards instead the rules governing the use of guarantees, the head of Bankitalia's Economic Structure Service underlined the need to make them "quickly operational with the necessary financial and technical resources, ensuring that the interventions reach the companies that need them to overcome the emergency, sheltered from the risks of infiltration from part of illegal activities”.
