Pierre Gramegna at Les Rencontres Economiques 2023

Panel: "Is endless debt reasonable?"

As interest rates rise, the accumulation of public debts accentuated by recent crises, combined with very high levels of private debt, raises questions about the solvency of borrowers in both North and South. At first sight, default risks are higher when foreign currency debt is high and when private finance is unregulated, but the issue is more complex. To deal with it, we need to look at the sustainability of these debts, which is not based on a single threshold, fixed a priori, but on their capacity to generate growth and employment and to reduce inequalities. In a context of uncertainty, the long-term trajectory of the debt will depend both on available savings, which tend to increase, and on the considerable investments linked to the climate transition. So how can potential growth be affected? Will the banking and financial systems resist and what are the risks for the solvency of private and public actors? How can we prevent available savings from being concentrated in the countries of the North? How to finance a Green New Deal?