Europe predicted problems due to debt

Interviewed Bloomberg financiers predicted Eastern European countries that have joined To the European Union later than others, imminent problems due to the dramatically increased cost of servicing public debt.

The problems caused by the coronavirus pandemic and the economic downturn are forcing countries that previously avoided high levels of debt to resort to borrowing to replenish their budgets. Thus, there has been a significant shift in their fiscal policy, and the need to increase public debt raises concerns that are not observed in the states of Central and Western Europe, which are accustomed to this state of affairs.

According to analysts, budgetary savings have been characteristic of Eastern European countries since socialist times. One of the most striking examples is the policy of the Romanian president Nicolae Ceausescu , who resorted to the most tough measures (up to regular power outages). It ultimately led to a revolution in which the head of state was ousted and subsequently executed.

Caution in borrowing turned out to be both pluses and minuses for Eastern European countries. On the one hand, it increased their credit ratings and allowed them to borrow at lower rates. On the other hand, it limited opportunities for public investment and economic growth.

Some countries had to increase their national debt during the previous global crisis in 2008. Since then, some states, such as the Czech Republic, have managed to reduce their debt burden. However, even among those who failed to do this, it remained at an acceptable level. The current recession is likely to finally lead to an increase in debt for a longer period, which in the long term will result in the need to spend more on debt service.

/OSINT/media/social.