Giovanni Zonzini (Rete) spoke on item 21 of the agenda of the Grand and General Council (Consiglio Grande e Generale), concerning amendments to the state and public entities’ budget forecast for the 2026 financial year. Below is his speech in full.
Giovanni Zonzini (Rete): I’d like to ask Secretary of State Gatti, who holds the Finance portfolio, for clarification on a very specific issue — one that I believe is highly relevant to the management of our public debt.
Specifically, I’m referring to the amendment removing Article 3, paragraph 1, which effectively reverses course on converting the irredeemable bond into ordinary government securities — that is, no longer perpetual, but with a five-year maturity.
In the first reading of the budget variation bill, the government had proposed issuing an additional 50 million euros in debt through the issuance of government securities, using that sum to reduce — by a corresponding amount, I presume — the irredeemable public debt security currently held as an asset by Cassa di Risparmio.
For those less familiar with the matter, let me briefly recap. The irredeemable bond was a solution devised at the start of the last legislature to cover the budget hole that emerged — or perhaps was made to emerge — at Cassa di Risparmio with the 2017 financial statements.
We all remember that staggering loss of 534 million euros. The irredeemable bond is, in effect, a government security that pays Cassa di Risparmio 1.5% interest per year, but has no maturity date, meaning that, in principle, the principal might never be repaid.
This means the value of that irredeemable government security is not its face value, since there is no deadline for repaying the capital — but that doesn’t make it worthless paper either, as it generates an annual return of 1.5%.
From the State’s perspective, that debt is, in a sense, the best kind of debt we could have: it carries a low interest rate — lower than what we can obtain by placing our securities on the market — and at the same time has no repayment deadline, precisely because it is irredeemable.
From our point of view, it would have been an unwise move, at this particular moment, to replace 50 million euros of debt on which we pay 1.5% and never have to repay the principal, with 50 million euros of debt that, I believe, would cost us 3.5% and would need to be repaid, if I’m not mistaken, within five years.
I’m pleased that this repealing amendment has come from the government, which evidently realised that this was perhaps not a particularly clever move — but I would like to understand from the Finance Secretary what the government’s intentions are.
Does this amendment represent a new government stance — that is, postponing for now the conversion of the irredeemable bond into ordinary government securities, especially given that our public budget is currently under strain and, looking at the medium-term outlook, let’s not forget the BNS bonds due to mature?
Or is this merely a temporary choice, after which the government will go back on its decision — something I sincerely hope does not happen?
In any case, we welcome the government’s step back, made explicit through this repealing amendment, and we hope the new direction will not change. It seems to us entirely inappropriate and unwise, at this difficult moment for the State budget, to convert 50 million euros of irredeemable securities — on which we never have to repay the principal and pay just 1.5% interest — into government securities with a five-year maturity and a 3.5% interest rate.
I would therefore like clarification on the reasons that led the government to present the amendment repealing Article 3, paragraph 1, and also on what the government’s future intentions are regarding the irredeemable bond.
