Nazaré da Costa Cabral supports the issuance of joint public debt to finance fiscal policies in response to the pandemic crisis.
The Portuguese Public Finance Council (CFP) supports the Eurobonds issue to respond to the economic brake caused by Covid-19. The hypothesis is defended in an opinion article, published in Jornal de Negócios, signed by president Nazaré da Costa Cabral, and by the two members of the Superior Council Miguel St. Aubyn and Carlos Marinheiro.
The pandemic risks throwing the European economy into a crisis. “As in many battles, there are two fronts: the monetary front and the budget front. We will probably have to resort to heterodox measures on both fronts,” say members of the CFP, who are already in contact with other independent budgetary institutions to take a common position.
On the monetary policy side, the European Central Bank (ECB) has announced an emergency package of 750 billion euros. It is on the fiscal policy side that the CFP advocates a response to the common shock in the form of joint financing. The model of the Eurobonds, which could be called Coronabonds, had also been supported by the Bank of Portugal governor, Carlos Costa.
“It is a question of opening the door, albeit momentarily, to the joint issuance by European or Eurozone countries of public debt, guaranteeing the necessary sharing of risk and avoiding that the increase in indebtedness associated with (direct and indirect) spending on the pandemic could lead to an increase in national risk premiums or to losses of access to funding in the most affected economies and, at the limit, to a new sovereign debt crisis, which would increase the already high costs and suffering of the population,” stress Costa Cabral, St. Aubyn and Marinheiro.